UPDATE 1-China says hopes U.S. govt protects investor interests

Thu Jul 14, 2011 4:04am EDT

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BEIJING, July 14 (Reuters) - China's Foreign Ministry said on Thursday that it hoped the U.S. government would take a responsible attitude to protect investor interests, in Beijing's latest expression of concern about the possibility of Washington briefly defaulting on its debt.

Moody's Investors Service warned on Wednesday that the United States may lose its top credit rating in the coming weeks if the limit on American borrowing was not raised. .

"We hope that the U.S. government adopts responsible policies and measures to guarantee the interests of investors," ministry spokesman Hong Lei said at a regular news briefing in Beijing, when asked about the Moody's report.

He did not elaborate.

China, the United States' biggest creditor with more than $1 trillion in Treasury debt as of March, fears even a small default could destabilise the global economy and sour political relations.

The U.S. Treasury Department has warned the country will face default if Congress does not lift the $14.3 trillion debt ceiling by Aug. 2. That could push the country back into recession and upend financial markets across the globe.

Beijing has repeatedly warned that loose U.S. monetary policy threatens the dollar, but it has continued to accumulate dollar assets at the same time, adding about $260 billion of Treasury securities last year, according to U.S. data. (Reporting by Ben Blanchard and Sabrina Mao; Editing by Jonathan Hopfner and Ken Wills)

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