A Chinese Credit Agency attempting to compete with Western reporting agencies declared that Washington is a worse credit risk than Beijing–Dagong Intl rated Washington below China and 11 other countries.
What if China Reduces Its Holding of U.S. Securities: The financial crisis and the large increase in the U.S. Budget Deficit, have brought renewed concerns that China might decide to reduce its debt holdings of U.S. Securities. If China attempted to reduce its holdings of U.S. Securities, they would be sold to other investors (foreign and domestic) who would presumably require higher interest rates than those prevailing today to be enticed to buy them. One analyst estimates that a Chinese move away from long-term U.S. Securities could raise interest rates as much as 50 base points.
More here from Congressional Research Service, June 2009
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