US should support success of economic reforms in China

WASHINGTON -- Former US Treasury Secretary Henry Paulson said on Sunday the United States should support the success of economic reforms in China, which is critical to both countries and the global economy.

In an op-ed piece published in The Washington Post, Paulson said "China has made two principal contributions to global growth" in recent years by sustaining its own growth in the wake of the 2008 financial crisis and serving as a demand driver for the commodity and industrial exports of other countries.

China, however, needs "transition to a new economic model while restructuring local debt resulting from its flawed current model," Paulson said, adding that the recent slowdown of China's economy "reinforces the urgency of reforms that will establish the foundation for slower, but higher-quality, growth."

Paulson, a veteran China expert, said China's leaders understand this challenge of economic transition, and he believed China "has the necessary tools and financial capacity" to deal with it while accelerating the economic reform agenda.

"The United States, for all its differences with Beijing, should be rooting for China's economic reformers to succeed," he said.

In Paulson's views, China, as a large holder of US treasury securities, also has a lot at stake in "whether the United States undertakes urgent fiscal, tax and structural reforms that will allow our economy to grow faster."

While the US and Chinese economies are "increasingly complementary," there are lack of policies to better enable direct investment in each other's markets and provide companies a level playing field, said the former US official who served as treasury secretary from 2006 to 2009.