US debt 'should factor in inflation'

The US government should take inflation into account in deciding the return of its Treasury bonds, a former top Chinese official said.

"The US should link the earnings of government bonds with inflation to protect the interests of international investors, including Asian nations," Zeng Peiyan, former Chinese vice-premier, said at the Boao Forum for Asia over the weekend. Zeng now heads the newly established China Center for International Economic Exchanges, a top government think tank.

China's foreign reserves, at $1.95 trillion, are the world's largest. Seventy percent is held in US dollar-denominated assets such as Treasury bonds.