Geithner placed "China's move towards a more flexible exchange rate with more open capital markets" first in a list of key issues to discuss as the two-day US-China Strategic and Economic Dialogue opened in Washington.

He also listed China's need for financial sector reforms to boost the country's private sector, and the need for "a more level playing field" in trade and investment between the two economic superpowers.

earlier related report
Lawmakers seek info on risks of China holding US debt
Washington (AFP) May 9, 2011 - Annual US military spending legislation unveiled Monday calls for the Pentagon and the US spy chief to determine whether China's vast holdings of US debt pose a national security risk.

The US defense secretary and director of national intelligence would have 120 days after the bill's adoption to report back to the US Congress on whether Beijing could draw a military advantage from its status as a major US creditor.

The report must include "a discussion of any options available to China for deterring United States military freedom of action in the Western Pacific as a result of its creditor status," according to the legislation.

The measure would give the US Congressional Budget Office 30 days to tell lawmakers and the US public how much interest Washington has paid Beijing on US national debt holdings over the past five years.

The proposal emerged as US lawmakers worriedly eyed ways to rein in galloping US deficits and national debt.

House Armed Services Committee Chairman Buck McKeon, a Republican, unveiled the underlying bill, the National Defense Authorization Act for the fiscal year that opens October 1, ahead of hearings and debate on the measure.

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