The Wall Street Journal is reporting that officials in Asian nations with

The Wall Street Journal is reporting that officials in Asian nations with massive stockpiles of U.S. government bonds expressed confidence Washington would reach a debt deal while fretting that a failure to do so could have dire consequences for the global economy.

A U.S. default would trigger major market volatility, raise interest rates, and could “kill off a still-weak economic recovery,” said Zhang Ming, deputy director of the research section for international finance within the Chinese Academy of Social Science, in an essay.

The most likely scenario, he wrote, is for the U.S. political parties to reach a short-term deal to avoid default. He estimated the risk of default at 10%.

Xia Bin, an academic adviser to the People’s Bank of China, said the U.S. government “can’t and won’t default” on its debt.

A senior State Department official noted Monday that China has repeatedly expressed its displeasure at the prospect of a default in private diplomatic settings. China holds $3.2 trillion of foreign-currency reserves. Analysts estimate around 60% of that is in U.S. dollar assets.

Japan, a staunch U.S. ally with over $1.1 trillion in reserves, much of that in dollars, was more circumspect. Yukio Edano, chief cabinet secretary, said the government is “carefully monitoring” the debt talks “from the political as well as economic perspectives.”

In South Korea, with over $300 billion in reserves, much of that in dollars, the central bank said it is so confident of a deal it isn’t considering a contingency plan for a possible U.S. debt default, a senior official said today.

Asian markets paid slight attention to the debt talks Monday, figuring there was still time to strike a deal by the Aug. 2 date the U.S. Treasury has cited as when the government will fall short of its expenditure needs. Analysts at Barclays Capital figure improvement in tax revenue in recent weeks might even extend the breakeven date to Aug. 10.