Geithner reassures China on US borrowing

US Treasury Secretary Timothy Geithner sought to reassure Beijing that the US is not borrowing irrresponsibly using China’s dollar reserves, Bloomberg reported. "No one is going to be more concerned about future deficits than we are," Geithner said on his way to meetings in Beijing. Premier Wen Jiabao expressed concern about the security of Chinese investments last March. China is the largest holder of US Treasury bonds, which have so far this year handed holders the worst losses since 1977 as the US government issued more debt. Yields on the benchmark 10-year Treasury note rose to 3.74% on May 27, the highest level since mid-November last year. "I hope Geithner’s visit can soothe our nerves," said Yu Yongding, a senior researcher at the government-backed Chinese Academy of Social Sciences and a former central bank adviser. Yu suggested that the US needs to demonstrate how it plans to protect the value of Chinese holdings against a weakened dollar domestic inflation provoked by stimulus spending. Geithner said that the Obama administration plans to reduce the current projected 12.9% budget shortfall to 3%.