“Deterioration in fiscal strength and frequent breaches of the debt ceiling continue to erode the credit base of the US dollar,” it added.
This is the first time a Chinese institution has explicitly expressed worries on the US debt issues, but there has been no official response from Beijing, which slashed its holding of US Treasury bills by a total of US$143.9 billion, or 14.2 per cent, in the past year up to March.
On Wednesday, Fitch put the US on notice for a possible credit downgrade, pointing to the debt-level “brinkmanship” in political negotiations to raise the debt ceiling.
A sovereign rating decline raises short-term borrowing costs for taxpayers, which affects the cost of repaying the US’ debt of US$31.4 trillion.
AA+ remains an investible grade with strong repayment ability and low default risk, according to CCXI’s terminology.
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