JOSH Noble in the FT has a great piece on the views of Dagong, China's credit rating agency. Since China is the world's key creditor, it makes sense to focus on its views. Never mind "negative watch"; Dagong downgraded the US back in November from AA to A+, on a par with Chile. Only Switzerland, Denmark and Australia are ranked AAA; China and Germany are AA+ or three notches higher than the US.

Nor does the agency pull its punches. In its outlook for the year, published in January, it said that

the United States, as the biggest country involved in sovereign debt crisis around the world, will continue its quantitative easing policy when the country is in danger, and the world credit war will be escalated due to the overflow of US dollars. In particular, the trend of continuous depreciation of US dollar will result in haircut of international creditors' debts dominated in US dollar. The issuance of US dollar encourages numerous speculative capitals into the global commodity market, leading to an increasing pressure on global inflation. Different countries, in order to avoid unpredictable losses on their own interests, will have to seek for adjustment of international credit relations, and the global credit war, no doubt, will become the turning point of reforming international credit relations in 2011.

adding that

First, the trend of long-term depreciation of US dollar will result in haircut of international creditors' debts dominated in US dollar. As the interest rate of US government debt is lowered due to the quantitative easing policy adopted by the United States, creditors can not obtain the investment return commensurate with the risk status of US Treasuries. At the same time, the depreciation will also cause continuous exchange losses for the international creditors.

Now, of course, some of this may be politically-inspired rhetoric and if China wants to manage its currency against the dollar, it has little choice but to keep buying US government debt. But at least one can't dismiss the views of Dagong, as some dismiss the views of S&P, as the people who got it wrong about subprime CDOs.