China has issued a warning on U.S. debt:
"To rescue the ailing U.S. economy by increasing government borrowing will create a record-high federal deficit," said Yu Zuyao, economist with the Chinese Academy of Social Sciences, a government think tank.
"This can further lead to catastrophic consequences such as serious inflation and U.S. dollar depreciation," he said Tuesday.
"Buying U.S. government bonds amid an economic downturn, [a purchase] that is not based on the sound performance of the U.S. economy itself, indicates a huge bubble," said Zuo Xiaolei, chief economist of China Galaxy Securities.
e in the interests of the United States and other countries and would exacerbate the crisis."
Said Zuo: "U.S. dollar depreciation is inevitable in the long run. China should prepare and reduce its holdings of U.S. Treasuries to a proper size."