US Treasury chief says US, China must 'maintain partnership' UPDATE

US Treasury chief says US, China must 'maintain partnership' UPDATE

	Published : Tue, 22 May 2007 15:43 By : Agencies Print this Story

(Addds details, quotes from Henry Kissinger, Vice Premier Wu Yi)

WASHINGTON (Thomson Financial) - Despite growing tensions between the United States and China, the two nations must 'maintain a partnership' to solve what may seem to be intractable differences over international trade and other economic disputes, US Treasury Secretary Henry Paulson said this morning.

'Our task is not an easy one. We must address the immediate concerns that are impacting our industries and citizens and simultaneously identify tomorrow's issues,' Paulson said in opening remarks of high-level talks between top officials from both nations.

'We must maintain a partnership, and engage in this process to solve what may seem unsolvable,' he said, adding that Americans are 'impatient' with the pace of change in China, which has become 'a symbol of the real and imagined downside of global competition.'

The Treasury chief said the cabinet-level delegations, known as the 'Strategic Economic Dialogue,' are meeting 'under the wary eyes' of politicians, business and labor in both countries and that there is 'a growing skepticism in each country about the others' intentions.'

In her opening statement, Chinese delegation head Vice-Premier Wu Yi warned against attempts to 'politicize' US-China economic relations.

'We should not easily blame the other side for our own domestic problems,' she said, 'Confrontation does no good at all to problem-solving.'

Paulson characterizes his approach to China as long-term relationship management rather than the one-by-one pursuit of deals on currency or trade. To symbolize that, he invited former Secretary of State Henry Kissinger to make a kind of keynote speech to the delegates.

This year is the 35th anniversary of former President Richard Nixon's visit to China, which Kissinger negotiated.

The former National Security Adviser said that now, as then, that 'the peace of the world and the progress of the world required close cooperation between our two great peoples.'

The United States and China, Kissinger said, 'can set a standard and a framework for the rest of the globalized community.'

Treasury officials have emphasized that the Chinese delegation will also meet with members of Congress behind closed doors during their visit.

Officials and many outside analysts are skeptical that the Chinese understand the intensity of anger in Washington and the real potential for a protectionist backlash.

Last Friday, the Peoples Bank of China widened the band in which the yuan is allowed to fluctuate against the dollar, but the move was seen in currency markets as a largely symbolic attempt to improve the atmosphere before the the SED talks.

Treasury's China Special Envoy Alan Holmer has said the US is also expecting China to offer wider access to American financial services firms and airlines during the talks.

For their part, the Chinese want looser US restrictions on high-technology exports to their country.

dennis.moore@thomson.com

dem/cbd/wash

The copying, republication or redistribution of AFX News Content, including by framing or similar means, is expressly prohibited without the prior written consent of AFX News.