Illustration: Chen Xia/Global Times

JPMorgan reportedly raised the alarm over the soaring US national debt, likening it to a "boiling frog" phenomenon for the economy. The warning deserves the serious attention of top US officials, but, unfortunately, they will likely remain as indifferent as ever.

According to data from the US Treasury Department, the federal government's gross national debt has surpassed $34 trillion, a record high that foreshadows forthcoming challenges.

Comparing a country's debt with its GDP reveals the country's ability to pay down its debt. Some economists believe that a debt-to-GDP ratio of 60 percent is a safety line, but the debt-to-GDP ratio had already surpassed 100 percent in 2013, when both debt and GDP stood at approximately $16.7 trillion. The US debt has continued to rise and reached a worrying level.

JPMorgan has warned that the $34 trillion debt mountain might be a "boiling frog" phenomenon for the economy, as higher deficits and ballooning debt servicing costs could easily become unsustainable, Business Insider reported on Monday. This is the latest warning from the business community about US debt sustainability.

Congressional leaders reached a bipartisan deal on Sunday, setting a roughly $1.6 trillion federal spending level for 2024. That may help avert a partial government shutdown later this month, but much work is still needed. JPMorgan's warning reminds everyone of the necessity to defuse risks around the country's $34 trillion national debt.

Moody's in November lowered its outlook on the US credit rating to "negative" from "stable," citing large fiscal deficits and a decline in debt affordability. Against this backdrop, it is natural and normal for other countries to reduce their holdings of US Treasury bonds. In 2024, the trend of trimming Treasury holdings is likely to continue.

Chinese holdings of US Treasury bonds fell to $769.6 billion in October 2023, marking the seventh consecutive monthly drop, according to data released by the US Treasury in December. 

When China reduces its US Treasury holdings, it's always a sensitive topic, as some observers tend to view it through a geopolitical lens. 

But China has never politicized or weaponized its Treasury holdings. It is necessary to gain a correct understanding of China's reduction of US Treasury holdings, which will help avoid unnecessary friction.

China is simply doing the same thing as some other countries. US Treasury debt has long been considered a "risk-free" asset, but the situation is gradually changing. China's reduction of its US Treasury holdings is necessary given investors' concerns about mounting federal debt, and China's need to optimize the structure of its overseas assets. 

Business Insider reported that a frog thrown in boiling water might jump out, but if the water comes to a boil slowly, it's too late by the time it notices it's being cooked. Before the bubble bursts, the US should find a way to defuse its debt risks; otherwise, the security and attractiveness of US Treasury debt will be further reduced.

However, it seems unlikely that the US will significantly reduce its spending. On the contrary, Washington may issue even more debt and transfer its financial risks to other countries.

The only certainty in 2024 may be the uncertainty for the global economy. Each country needs to purchase or sell US bonds according to its own needs and avoid being coerced by the US to become a victim of the US financial bubble. There is a probability that countries will continue to decrease their holdings of US bonds in 2024.

The author is a reporter with the Global Times. bizopinion@globaltimes.com.cn