A U.S. debt default is likely to lead to a global financial crisis that would hit the Chinese economy, too.
A short default lasting no more than a week could still result in a 0.7 percentage point decline in the U.S.'s gross domestic product and the loss of 1.5 million jobs, credit ratings agency Moody's said in a report earlier this month.
China's stake in Treasurys has declined over time to $869.3 billion, or 11 percent of foreign-owned debt. Japan tops the major foreign holders' list at $1.08 trillion, or 14 percent, and the United Kingdom is third at $714 billion, or 9 percent. If the financial crisis of 2007-2008 is any indication, the Chinese economy could suffer from a collapse in global demand for its manufacturing sector, which is still in the middle of"A U.S. default will be a huge negative shock to both the U.S. and global economy. The negative impact on China likely takes place via two related but distinct channels: the financial market and trade," said Guonan Ma, a senior fellow at the Asia Society Policy Institute.
IMF statistics from the fourth quarter of 2022 showed the dollar accounted for 58.36 percent of global central bank reserves, compared to 20.47 percent for the euro and just 2.69 percent for the yuan.
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