CHINA, THE world’s second largest economy, cautiously welcomed the deal to avert a massive debt default by the world’s biggest economy, but warned that America’s debt remained a threat to the global economy.
China is the biggest foreign investor in US Treasury Bonds, and its holdings reached a record $1.149 trillion (€810 billion) in April, according to a June Treasury Department report. Dollar investments account for around 70 per cent of its $3.2 trillion in foreign exchange reserves.
"Although the United States has basically avoided default, its sovereign debt problems remain unresolved. They have merely been pushed off, and there is a tendency for them to grow," a brief commentary in the People's Dailynewspaper said. The paper added that the "the dollar remains a hard currency that all countries have no choice but to accept".