Photo: Xinhua

The US' extension of the debt limit into December could bring the global financial markets, including China's, into a temporary safety strip, experts said, although the possibility of a global financial default is not ruled out entirely in the short term.

They also noted that the massive US debt has now become a sword of Damocles over the global financial markets with high chances of default. This weakens the role of the US debt and the dollar as the safe haven for world financial assets. 

The comments were made on Wednesday after US Senate Minority Leader, Mitch McConnell, offered Democrats a deal to raise the US debt ceiling into December to avert a national default and economic crisis. The offer came after the two parties engaged in what overseas media called "a game of chicken" in the raise of the debt ceiling. 

On Tuesday, US Treasury Secretary Janet Yellen reportedly said that she believes the US economy would "fall into a recession" if the borrowing limit of the federal government is not addressed, according to a CNBC report. 

Experts said that US bonds, once a favored investment target by global investors, are increasingly become a risk for international markets. 

"If the US parties could not reach an agreement in raising the debt limit, the US will have difficulties repaying its bonds which might cause a global financial crisis, such as stock slump and the plunge of financial derivative products," Xi Junyang, a professor at the Shanghai University of Finance and Economics, told the Global Times on Thursday. 

Xi also said a payment default would also cause many international companies to fail to retrieve or repay their debt, which would in turn strike a blow to the world economy, adding that "the Chinese economy will be affected as well, of course."  

However, Xi anticipated that the US politicians could eventually reach an agreement on the bond ceiling issue. "The consequences of not raising the debt limit are too severe, " he said, noting that the extension of the debt limit to December will give the US some time to decide the extent of the rise .