Beijing: US treasury secretary Timothy Geithner, aiming to persuade China that its US investments were safe, pledged that the Obama administration was firmly committed to ratcheting down huge deficits as quickly as it can once economic recovery is assured.
“No one is going to be more concerned about future deficits than we are,” he told reporters while en route to Beijing for two days of meetings on Monday and Tuesday with top Chinese officials including President Hu Jintao and premier Wen Jiabao.
During the past week, uneasiness in financial markets over soaring US budget deficits has driven interest rates up and added to worry about whether there will be buyers for the flood of US debt securities that are being auctioned to pay for recovery efforts.
China is the largest single purchaser of US treasury debt and already has shifted investment of some of its reserves to shorter-term maturities, a sign that it may fear the US will be forced to push interest rates up to control inflation when recovery begins.
Higher interest rates could erode the value of China’s US dollar-denominated debt and Wen said earlier this year that he was concerned about the security of its debt. “I do indeed have some worries,” he said in March.