US-China relations critical to global economy, Paulson says

Dec 2, 2008, 20:07 GMT

Washington - Strong cooperation and growth in the United States and China is crucial to the global economy as it hopes to remain out of recession, Treasury Secretary Henry Paulson said Tuesday ahead of a cabinet-level meeting of the two countries.

Paulson will lead a high-level US delegation to Beijing this week to discuss a range of economic issues, including the ongoing financial crisis that has plunged the United States into recession and brought China down from the double-digit growth rates of past years.

The International Monetary Fund has forecast a global recession in 2009.

'The strength of our economies is not only critical to our own citizens, but to people in every corner of the globe,' Paulson said in a speech in Washington.

China last month announced a more than 800-billion-dollar fiscal stimulus package to help boost demand. President-elect Barack Obama has promised a stimulus of similar proportions as soon as he enters office in January.

It is the fifth time cabinet members from the two countries are meeting under the so-called Strategic Economic Dialogue (SED) created by President George W Bush and Chinese President Hu Jintao in 2006.

At the last meeting in June, the US and China agreed upon a 10- year deal on energy cooperation. This time, Paulson said he would continue to push his Chinese counterparts on exchange rate reform - long a priority for the US - and liberalizing financial markets.

The two would also discuss ways to shore up international oversight of financial institutions and ensure the economic crisis does not lead to new trade barriers.

'Even during a period of trade tension, the SED has helped us manage difficult issues and kept our markets open to trade and investment,' Paulson said.