WASHINGTON - SENIOR Chinese leaders have privately voiced fear over the soaring US budget deficit and are increasingly looking to diversify from the dollar, a US congressman said on Monday.

'We heard across the board - in private - substantial, continuing and rising concern,' Representative Mark Kirk said after a trip to China that included talks with senior officials and central bank chief Zhou Xiaochuan.

'It's clear that China would like to diversify from its dollar investments,' the Republican lawmaker said at the Centre for Strategic and International Studies, a Washington think-tank.

Mr Kirk's assessment differed with that of Representative Rick Larsen, a member of President Barack Obama's Democratic Party who travelled with him and offered a rosier picture of Chinese leaders' views on the US economy.

But Mr Larsen agreed that Chinese leaders were looking for a signal from the United States on its deficit in what he said was a 'wake-up call' for Congress to tame borrowing as the world's largest economy suffers a recession.

China is the largest creditor to the United States with some US$700 billion (S$1.05 trillion) invested in Treasury bonds. Mr Zhou earlier this year floated the idea of replacing the dollar with a basket of currencies as the benchmark global unit.

Mr Kirk said that Chinese leaders were sharply critical in private of the US Federal Reserve's policy of 'quantitative easing' - a form of flooding the financial system with cash, which critics deride as printing imaginary money.

The United States has been running large budget shortfalls since the tenure of president George W. Bush.

Government officials estimate a deficit of US$1.84 trillion for the 2009 budget.

Mr Kirk, a former diplomat who remains an active reservist in the US Navy, is seen as a rising star in the Republican Party and is eyeing a run next year for Mr Obama's former US Senate seat in Illinois. -- AFP