China Worries About Its Holdings of $1 Trillion in U.S. Government Debt

As the global financial crisis deepens, China has expressed concerns about whether its some $1 trillion in investments in U.S. government debt will be secure.

"We have lent a huge amount of money to the U.S., so of course we are concerned about the safety of our assets. To be honest, I am definitely a little worried," Chinese Premier Wen Jiabao told reporters at his annual news conference today.

He didn't detail his concerns, but analysts say one could be that the dollar's value will fall over time, making China's investments worth less.

Wen said China will be keeping a close watch on the American economy. The country's foreign minister, Yang Jiechi, met with U.S. officials in Washington this week to discuss economic policy. Chinese President Hu Jintao is expected to meet President Obama at an April 2 summit in London of the Group of 20 major economies.

Wen didn't indicate any shift in Chinese policy toward U.S. investments and said that his government is willing to lend the U.S. more money and is in the financial position to do so. China, he said, will "take international financial stability into consideration" because that stability is interlinked with China's own interests. China last year surpassed Japan as the No. 1 foreign holder of U.S. treasury securities.

Still, the immediate effect of Wen's comments was to drive down U.S. currency in Asian trading.

Meanwhile, positive news from General Motors and Bank of America, both of which say that their financial situations are improving, helped Wall Street rally this week. Even so, a Thursday report from the Federal Reserve showed that Americans lost about 18 percent of their net worth over the course of 2008, a sign that, positive indicators aside, the country has a long way to go.

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