The United States needs to continue borrowing to repay existing debts and pay government expenses. Simply put, it is to borrow new debts to pay off old debts.

In order to prevent the government from unrestrained spending, Congress has set a borrowing ceiling, beyond which no more government bonds can be issued. If Congress fails to approve the increase by then, it may default on the national debt.

Because US Treasury bonds have always been the most stable foreign exchange investment products, like China, there has always been a large amount of foreign exchange reserves used to buy US Treasury bonds. If the United States really defaults, it will be a loss. Even if there is no actual default, the possibility of default will force China to diversify its foreign exchange reserve investment in the future.

Because the actual default of national debt has a great impact, the consequences are almost unimaginable. It is expected that the two parties in Congress will finally reach a compromise. Before that, if the borrowing limit is reached, some non-essential government services will suspend the transfer of funds, and the debt will not default immediately.