i'm pauline choiu in hong kong. i'm pauline choiu in hong kong.-bye for now. -- captions by vitac -- www.vitac.com

pauline choiu, cnn, hong kong. >>> as pauline explained, japan is the second biggest holder of u.s. the debt come with the heavy burdens of japan's post tsunami and earthquake recovery. >> reporter: the stock exchange and currency markets are holding their breath waiting for u.s. lawmakers to strike a deal. investor concern is rising as tokyo stocks are down almost across the board, reflecting that what happens on the u.s. affects japan's economy from top to bottom, second only to china in holding u.s. debt. it hoeds about 20% of american debt. if the u.s. doesn't pay its bills, it's japan partially left holding the bag. japan's economic minister says he does not believe the u.s. will default, indicating u.s. bonds still remain a good bet for japan. he says if the worst case scenario happens and if the u.s. defaults, it would unleash a similar financial crisis to what the world saw after the subprime crisis in the u.s. he urged the u.s. to clean up its debt mess. economists say the rancor in washington also tells asia, the fastest growing economic region in the world that america's

i'm pauline choiu in hong kong. >> and i'm charles hodson in london. good-bye for now.

a little earlier pauline choiu spoke to him about the impact that it might have on foreign holders such as china and japan. >> i think they're work very hard to reach an agreement, and we clearly want to reassure the rest of the world that a lot of work is being done to resolve this issue, and this is clearly something that is important to its own economy but also we want to reassure the world that this is a very high priority in the administration, and i think for many members of the congress who may have differences. but i think a lot of people understand the significance of resolving this issue in a constructive way to underscore the full faith and credit of the united states internationally and domestically. >> the world trade organization recently ruled that china has violated trade laws by limiting quotas for certain raw materials, and china said that they're going to work on this. but recently they just announced their expert quotas for rare earth and minerals and it's basically the same as before. and some manufacturers are saying because of these quotas, they feel compelled to