Paulson says China investments no threat to U.S.

BEIJING (Reuters) - The United States is not threatened by the fact that China and other countries are big investors in U.S. securities, U.S. Treasury Secretary Henry Paulson said on Friday.

In an interview after the conclusion of high-level Sino-American talks, he added that there was strong support in China and elsewhere for U.S. government agency debt.

China has more than 60 percent of its $2 trillion in official reserves in dollars, much of it in U.S. government and agency debt.

China's holdings of U.S. Treasury debt rose to $585 billion in September, allowing it surpass Japan as the largest holder of U.S. Treasuries.

"It is a fact that China is an investor in U.S. securities," Paulson said. "I don't see any countries with holdings so large that I view as a threat."

China used the economic talks with the U.S. over the past two days in Beijing to hammer home the point that it expected the United States to ensure the safety of Chinese investments there.

China also has a big chunk of its foreign reserves invested in debt issued by troubled mortgage lenders Fannie Mae and Freddie Mac, which have effectively been taken over by the government.

"In terms of agency debt, we've taken strong steps when you see what the United States has done," Paulson said. "We have broad support in this country (China) and around the world for agency debt."

(Reporting Glen Somerville; Editing by Nick Macfie)