Geithner looks to sell safety of US bonds

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Play VideoU.S. Treasury: Geithner will discuss deficits

Visiting US Treasury Secretary Timothy Geithner is expected to reassure China of the safety of its investments in the US and resist the temptation of trade protectionism -- crucial to woo further Chinese lending to the world's largest borrower.

Geithner, who arrived in Beijing Sunday on his first trip as Treasury chief, is expected to meet with President Hu Jintao, Premier Wen Jiabao and Vice-Premier Wang Qishan, as well as deliver a speech at Peking University.

Observers say Geithner's top priority would be to persuade Chinese policymakers to continue the purchase of US Treasuries, vital for Barack Obama's administration to finance its stimulus plan and pull the US economy out of recession.

En route to Beijing, Geithner told reporters that the Obama administration was firmly committed to ratcheting down huge deficits as quickly as it can once economic recovery is assured, Reuters reported

"No one is going to be more concerned about future deficits than we are," he said.

However, Geithner could face a tough task reassuring his hosts that China's huge holdings of Treasury bonds would not lose value and the US dollar would remain stable.

China held $768 billion in Treasury securities as of March, making it the single largest holder of US government debt.

It is estimated about 70 percent of China's $2 trillion foreign exchange reserves are held in US dollar-denominated assets.

Yet, the US government's rising debt and the Federal Reserve's quantitative easing, which in effect means printing money, may dent Chinese investment in the US.