The Chinese government has said that it is watching the U.S. discussion over whether to raise the countrys debt ceiling, and increased pressure on the Obama administration to curb the deficit, according to Bloomberg. On Friday, Chinas vice-finance minister, Zhu Guangyao, told reporters that officials are paying close attention to the domestic discussion in the U.S. on debts and deficits. Zhu continued to say, We hope the U.S. can take effective measures toward fiscal reorganization. The increased attention comes with China holding a world-leading $1.15 trillion in Treasuries at the end of February.
Cliff Tan of Societe Generale highlighted Chinas role as probably the most important customer for U.S. Treasuries, and said, In the event of the unthinkable happening in Congress failing to raise the debt ceiling, youre going to have a major earthquake in global fixed-income markets. Zhu encouraged the U.S. to build a solid fiscal foundation for the long-term sustainable growth of the U.S. economy, and also offered his commitment to continue improving the currency system and exchange rate mechanism for the yuan.