Paulson stresses dialogue with China

The US and China should continue to seek a mutual understanding to strengthen the nations’ relationship and the next US Administration needs to continue to engage in dialogue with China, US Treasury Secretary Henry Paulson has said.

"One of the first challenges the next US president will face will be how to respond to China’s emergence as a global power," Paulson said in an article in the upcoming issue of Foreign Affairs magazine. "I believe that engagement is the only path to success."

In the article, Paulson said that the worries held by some Americans regarding China’s economic development were wrong, and China’s stable development was good for both countries.

"Americans who worry that China might overtake the United States are worrying about the wrong thing," said Paulson in the article titled "A Strategic Economic Engagement -Strengthening US-Chinese Ties".

Instead of worries over China’s development, Paulson said those people should be concerned that serious troubles in China’s economy could threaten the stability of the US and global economies.

He said the two countries have many overlapping interests in sectors such as trade, investment and environmental sustainability, and particularly in energy security. As the two largest consumers and two of the largest importers of oil in the world, China and the US are "natural allies", he said.

In a telephone conference held on Tuesday, Paulson said China was moving in the "right direction" on its currency reform efforts even though some US lawmakers are probably dissatisfied.

"I think Congress…can see change because the rate of appreciation has increased," he told reporters.

He said he believes China was "moving in the right direction" when it comes to currency reform. "I think a good number of people think the movement is inadequate, but I think people recognize that the pace of appreciation has accelerated," he said.

Paulson said he hopes the Strategic Economic Dialogue (SED), a biannual event attended by high-profile officials of the two countries initiated in 2006 will continue. "It is my hope that the next US president will expand on the SED to take US-Chinese relations to the next level," he stated in the article.

Paulson said the next round of the SED would focus on energy and environmental issues, and efforts to agree on an investment treaty.

He said the discussions, which will take place at the end of the year in China, would advance efforts by the two countries to work on a 10-year cooperative agreement aimed at addressing energy security and environmental pollution issues.

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