Treasury secretary visits China, plans talks

BEIJING – On his first official visit to China, Treasury Secretary Henry M. Paulson Jr. struck a conciliatory tone Wednesday, saying high-level economic dialogue, not quick-fix solutions, was the answer to solving vexing trade tensions.

Between visits with top Chinese leaders, the former Goldman Sachs chairman held a news conference to announce that the U.S. and China would begin holding twice-yearly, Cabinet-level talks aimed at developing an economic strategy that would help defuse protectionist sentiments in both countries.

Paulson’s trip comes amid growing criticism in Washington about China’s reluctance to open its market wider and to further reform its currency.

U.S. critics say the yuan is undervalued by as much as 40 percent, giving China’s exporters an unfair advantage and contributing to the $202 billion trade surplus with the U.S.

The yuan traded as high as 7.9255 against the dollar on Wednesday, its highest level since Beijing unpegged it to the U.S. dollar last July.

“Regrettably in the U.S., there is a sense that the Chinese don’t play fair when it comes to trade and economics,” said Paulson, who took office in July. “That’s why we created this unprecedented dialogue.”

President Bush proposed the arrangement last month in a telephone call to Chinese President Hu Jintao. Paulson said he and Chinese Vice Premier Wu Yi would oversee two meetings a year to try to manage what he described as “the most important economic bilateral relationship in the world today.”

Paulson, a frequent visitor to China in his days as an investment banker, received a warm welcome in Beijing, where leaders have displayed growing frustration over U.S. accusations of economic foul play. Wu described Paulson as “an old friend of China’s” and one of the few foreign officials who understood China well.