BEIJING -?The US's debt default crisis is poised to be over after US lawmakers approved an increase in the country's debt limit on Tuesday. However, China still has reasons to be jittery, as ripples of lingering US deficit problems will continue to reach China's shores.

Economists said that the US's debt relief plan is merely a form of temporary relief, with long-term debt problems remaining.

The House of Representatives on August 1 approved legislation that will raise the US debt limit by at least US$2.1 trillion and cut federal spending by more than US$2.1 trillion over the next decade. The measure was passed just one day before a threatened default.

The measure is signed by US President Barack Obama on Tuesday.

"It (approval of the debt plan) is within our expectations", said Wang Jun, an economist with the China Center for International Economic Exchanges.

The US government can't afford to default on its debt and ruin the credit of the US dollar, he said. FOREX SAFETY

For China, the largest foreign creditor of the US, the most direct and obvious impact of the US debt buildup pertains to the security of the country's massive foreign exchange reserves, said Lu Feng, an economics professor at Peking University.

The boosted debt ceiling will ward off the immediate threat of default, which means that China's dollar-denominated assets will not see a decline in value for now, he said.

Government data shows that China's forex reserves totaled nearly US$3.2 trillion as of the end of June. China held US$1.153 trillion in US Treasury debt as of the end of April.

Chinese leaders have repeatedly appealed to the US government to avoid measures that may erode the value of the dollar and those holdings.

"We hope the US government will create responsible policy measures to increase the confidence of international financial markets and respect and safeguard investors' interests," the State Administration of Foreign Exchange (SAFE) said in a statement last month.

The debt drama sent a signal to the Chinese government that it should accelerate the reform of its economic restructuring and exchange rate formation mechanism, Lu said.

Lu's view is widely shared by economists. They are largely concerned with the diversification of forex reserves, as the dollar still faces the risk of depreciation in the long-term.

China should reduce its holdings of US Treasury debt and purchase more bonds in other currencies to reduce risks, Wang said.

The SAFE restated last month that it will continue to press ahead with the diversification of its forex reserves .

However, the structure of China's forex reserves cannot be adjusted soon, as the greenback remains a relatively safe area for investment compared with other currencies, and supplies of other types of assets are not large enough to digest China's huge forex reserves, Wang said. INFLATION WORRIES

China also faces rising imported inflationary pressure, as the debt deal will push up prices of international commodities, which may undermine the government's efforts to keep prices in check.

An increasingly heavier debt burden on the US economy will dampen global purchases of the dollar and shift global investment to international commodities, which will in turn drive prices of commodities higher, said Wang Guoxing, vice head of the Pudong Institute for the US Economy.

China's inflation escalated to a three-year high of 6.4 percent in June. To put a lid on stubbornly high prices, the central bank has raised interest rates three times and increased its reserve requirement ratio for banks six times so far this year.

The tightening measures have slowed the country's manufacturing activity, with the Purchasing Managers' Index dropping to a 29-month low of 50.7 percent in July.

"The PMI data has been falling for months and there is still no sign of stabilizing, so I think the government should keep its current policy mix for sometime," Wang Jun said.

He said that he expects the Chinese government will not tighten its policies any further, as the economy is slowing and enterprises are suffering financing difficulties.

The central bank said on Monday that the government will keep a prudent monetary policy for the rest of the year. LONG-TERM RISKS

Raising the debt ceiling has allowed the US to avoid a disastrous debt default, which may be a positive sign for its fragile economic recovery, said Lu.

However, this doesn't mean that the measure will be able to rejuvenate the economy, said Lu, adding that the grueling Congress debate over the plan reflects the severity of the troubles facing the US economy.

The US is facing excessive debt and its development mode is unsustainable, he noted. Increased debt may evolve into a severe crisis if it continues to last, he added.

By raising the debt ceiling, the US government is trying to buy time for economic restructuring, but its real economic problems remain untouched, Wang Jun said.

The bigger concern is how the US government will repay its accumulated debt, given its slack economic recovery, he said.

Global markets have been impacted by the US's debt woes, with concerns that planned cuts in government spending in the world's largest economy will cripple growth.

Wall Street dipped at closing time on August 1 despite opening strongly, as investors welcomed an 11th-hour deal to raise the government's debt ceiling. Asian and European markets slumped Tuesday as investors' concerns over growth were renewed.

"The market response means investors are uncertain about the future of the US economy," Wang said.

Official figures showed that the US economy slowed to an annual growth rate of 1.3 percent during the second quarter of 2011, far short of market expectations of 1.7 percent.

Meanwhile, the US manufacturing sector continued to lose momentum in July due to weak demand. The US Institute for Supply Management's manufacturing index retreated to a two-year low of 50.9 percent in July, just slightly above the boom-or-bust line of 50 percent.

The huge spending cuts included in the US debt relief package marked the White House's shift from an expansive fiscal policy to a more austere one, which will have a long-term impact on global trade and economic recovery, said Zhang Yansheng, director of the Research Institute of Foreign Economic Relations of the National Development and Reform Commission, China's top economic planning agency.