> a) Probably the debt level can go much higher without destructive
> effects
I'd say there are already destructive effects, but it can probably go quite a bit higher without catastrophe.
> b) China has no place else to place its money, as well as having no
> industry if you were to subtract that devoted to exports to the U.S. and
> Europe
They could reduce holdings of US Treasury bills, buying US equity instead, or shifting to European debt. This would be much more of a problem for US gov't than for Chinese.
They are already both exporting to and investing in places like Africa, Brazil, Australia, the Middle East. They are trying to shift exports toward higher tech products, like the high-speed rail system they are negotiating with Brazil. Much of the investment is aimed at control of resources -- mining and natural gas, forestry, ..