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Analysts say China's holdings of US debt may lose value, if the US congress doesn't raise the ceiling for debt. If America can't make its repayments on time, China as the biggest holder of US debt, will take the hardest hit. China will then face the dilemma of buying more bonds while the yield is higher, or selling like other panicky investors.
Experts say the US Federal Reserve is still carrying out quantitative easing and maintaining an ultra easy monetary policy. So the greenback may very well depreciate, taking China's dollar-denominated assets down with it.
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