China may soon begin importing more than it exports thanks to rising income levels and government stimulus programs.

That, says one economist, may mean bad news for U.S. Treasuries and ultimately, higher interest rates.

If China saves much less and spends more as a nation, it has less money to buy U.S. Treasuries, which would force up rates and make borrowing more expensive here.

“In 2010, China's net purchases might be substantially smaller than they are now. They might even be turning net sellers,” Eric Fishwick, head of economic research at independent brokerage CLSA's Asia-Pacific Markets unit, told MarketWatch.

“That unfortunately means that the vast amount of Treasuries that need to be floated to fund the [fiscal] deficit are going to be absorbed by people who do make an investment decision on the attractiveness of holding these debt instruments,” Fishwick adds.

“That to me means only one thing — that yields are going to increase.”

For now, China continues to buy Treasuries and is still the largest foreign holder of the government debt instruments.

China added $24.1 billion in Treasuries to its portfolio in July after net sales of $25.1 billion in June, raising its stake in U.S. government debt 3.1 percent to $800.5 billion, according to Bloomberg.

China's holdings have risen 10 percent in 2009, after a 52 percent gain in 2008, when the credit crunch sent Chinese and other investors scrambling in demand for the safety of U.S. government debt.

According to the International Monetary Fund, the greenback accounts for 65 percent of world currency reserves, up from 62.8 percent in 2008.