If Tim Geithner did not realise it already, the US Treasury secretary found out on his first official visit to Beijing yesterday that he is dealing with a more self-confident, and sceptical, China.

After a speech at Peking University, Mr Geithner faced tough questions about US failures that contributed to the global financial crisis, as well as demands that China should now be treated as an equal in global economic issues.

One student suggested that, given the US's need for economic support from the Chinese government, he should in return advise Washington to stop selling weapons to Taiwan. Another asked if China's investments in US government securities were secure.

Some of the concern about the outlook for the US economy was echoed in his first round of talks with Chinese financial officials. Wang Qishan, vice-premier, also brought up the safety of China's financial assets. “What is important to me is the issue of our investments in US debt,” he said, according to a person present at the talks.

Mr Geithner got off a rocky start in his relations with China earlier this year when, in his confirmation hearings, he accused Beijing of “manipulating” its currency.

But yesterday he struck a diplomatic tone. For every point he made about the need for China to restructure its economy, he matched it with self-criticism about US economic weaknesses or a pledge of reform.

He tried to reassure his audience at Peking University that the administration would do what was necessary to bring its budget under control, reducing the fiscal deficit to about 3 per cent of gross domestic product.

“The president in his initial budget to Congress made it clear that, as soon as recovery is firmly established, we are going to have to bring our fiscal deficit down to a level that is sustainable over the medium term,” he said.

He told the audience that temporary investments and tax incentives aimed at stimulating private demand would eventually expire. “We will have to be very disciplined in limiting future commitments through the reintroduction of budget disciplines, such as pay-as-you go rules,” he said. In addition, he promised to build a system of financial regulation that would be more conservative and give higher priority to protecting consumers.

His remarks were aimed at addressing concern in Beijing, emphasised repeatedly by officials in recent months, that the US's ballooning public debt could trigger inflation and a depreciation of the dollar and put China's financial investments in jeopardy. With about 70 per cent of its near $2,000bn (€1,428bn, £1,250bn) reserves tied up in US government assets, China is the largest foreign holder of Treasury bonds.

However, Mr Geithner also told his audience that the economic crisis meant China would have to make changes to its own growth model, reducing the importance it has placed on exports. “In the US, saving rates will have to increase, and the purchases of US consumers cannot be as dominant a driver of growth as they have been in the past,” he said.

“Growth [in China] that is sustainable will require a very substantial shift from external to domestic demand.” Such a shift would require a more flexible currency regime.

Mr Geithner also pledged support for a bigger Chinese role in international financial institutions, “that was commensurate with China's importance in the global economy”.

As part of the increasingly active stance that China has taken in international economic affairs as a result of the crisis, Beijing has proposed the eventual replacement of the US dollar as the global reserve currency by a basket of currencies and commodities.

Although few economists believe such an idea will be adopted in the short-term, Mr Geithner's young audience yesterday were convinced this crisis has created a shift in the global balance of power.

“His visit shows the importance they attach to us,” said Yang Gui, an economics student. “Following the financial crisis, the weights in the global political economy have changed – the US can no longer just preach to China to reform.”