Paulson lauds China cooperation amid market turmoil

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(Agencies)
Updated: 2008-10-22 08:02

Treasury Secretary Henry Paulson (L) is greeted by traders on the floor of the New York Stock Exchange October 21, 2008. [Agencies]

Before the credit crisis forced him to prop up faltering US financial institutions, Paulson had made US-China economic relations the centerpiece of his two-and-a-half-year term.

The former Goldman Sachs chief has made more than 75 trips to China during his career and launched the dialogue talks to try to tackle thorny issues such as America's ballooning trade deficit with China and what many US firms and lawmakers viewed as an undervalued yuan.

While the talks mainly have produced agreements on air services, product safety and energy and environmental cooperation, they have coincided with a gradual rise in the value of the yuan against the dollar.

Paulson said the talks have been an "excellent forum" for discussing the yuan's value, but he refrained from urging that Beijing allow faster appreciation. "I am pleased that China has appreciated the RMB by over 20 percent since July of 2005," he said.

Paulson also urged China to continue with financial sector and capital markets reform despite the global turmoil that has shaken US financial institutions to their foundations.

"Some in China look at the recent failures in our financial markets and conclude that they should slow down their reforms," Paulson said. "But there is a great opportunity for China to learn from our significant mistakes and move forward with reforms that have the potential to produce important gains for China and its people."

He said these include helping to rebalance China's growth to improve living standards for Chinese households, helping to allow monetary policy to tame inflation and encourage market-driven innovation.

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