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Chinese economists see risks in U.S. debt

Treasury Secretary Timothy Geithner testifies on the Trouble Asset Relief Program before the Senate Banking, Housing and Urban Affairs Committee in Washington on May 20, 2009. (UPI Photo/Kevin Dietsch)
Treasury Secretary Timothy Geithner testifies on the Trouble Asset Relief Program before the Senate Banking, Housing and Urban Affairs Committee in Washington on May 20, 2009. (UPI Photo/Kevin Dietsch) | License Photo

BEIJING, May 31 (UPI) -- A majority of Chinese economists, in a survey released as U.S. Treasury Secretary Timothy Geithner visits China, see China's U.S. debt holdings as risky.

Of the 23 economists surveyed, 17 said they believed the U.S. bonds pose great risks to China's economy, China's state-run Xinhua news agency reported. The results of the survey were published in Global Times, based in Beijing.

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China is the largest holder of U.S. debt, which has raised concerns in that country about the safety of the investments in the face of U.S. deficits and concerns about erosion of their value if inflation jumped or the dollar fell.

Geithner will seek to assure China its large holdings of U.S. are safe, Xinhua reported.

In the survey, some experts said the United States may "export" its worsening financial crisis to China by printing more dollars, Xinhua said. Those dissenting said investments in U.S. Treasuries are less risky than others, as the United States is still the engine of world economy, the report said.

Song Fengming of the School of Economics and Management at Tsinghua University said China has no better option than to buy U.S. Treasuries, as other options such as the Japanese Yen and British pound remain volatile and soft, the report said.

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Most economists in the survey said China must expand investments in tangible and strategic materials such as grain, energy and mineral resources. They said Chinese enterprises should go for overseas mergers and acquisitions while boosting exports of high technology.

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