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US, China Set Up Economic Cooperation Dialogue

U.S. Treasury Secretary Henry Paulson says the United States and China will start holding regular high-level talks to boost economic cooperation. Paulson is on a visit to Beijing, where he urged China to hurry its financial reforms.

The U.S. treasury secretary told Chinese officials their country will benefit if Beijing speeds up efforts to open its markets and create a competitive and open financial system.

Henry Paulson said key to that progress is further reform of China's currency policy, echoing calls the Bush administration has long made for Beijing to relax controls on the yuan.

Some politicians and labor unions in the United States accuse China of keeping its currency artificially cheap, something they say is killing American jobs.

After meetings in Beijing Wednesday, Paulson told reporters he understands results will not come right away, and he said he is not here to push any formulas on the Chinese.

"Right now, when I'm looking at something short of the perfect outcome, which is a freely tradable currency, I'm not going to get all concerned about what technique they use to get flexibility," he said. "I'm going to know flexibility when I see it and so are you."

Paulson said financial officials from the two countries will meet more often to discuss shared concerns and policy issues.

The announcement of the two countries' economic dialogue came as trade relations continue to suffer because of the United States' trade deficit with China. The trade gap topped $202 billion last year.

Paulson is on his first trip to China as treasury secretary. However, during his years as an investment banker, he made dozens of visits to the country and has many contacts in the government and in the business community.

Secretary Paulson also commented on the fallout from Tuesday's military coup in Thailand. He said there is little evidence so far of dislocation in the Thai capital markets and none in the global markets.

"I don't mean to say that an adverse development isn't possible, but if I'm thinking about the top five or six things I'm worrying about today, that is not on the list," he added.

Paulson's trip to Asia also included a stop earlier this week in Singapore, for the annual meeting of the World Bank and International Monetary Fund.