U.S. Treasury Secretary Henry Paulson Tuesday opened a two-day strategic economic dialogue in Washington with a Chinese delegation headed by Vice Premier Wu Yi. VOA's Barry Wood reports.
The meeting brings together over a dozen U.S. and Chinese cabinet officers as well as the two central bank chiefs. The bilateral trade relationship has grown rapidly but so lopsided in China's favor that there is mounting protectionist pressure in Congress.
While Treasury Secretary Paulson says the dialogue takes a long-term perspective, the Americans want action to redress the trade imbalance. Vice Premier Wu warned the opening session that economic matters must not be politicized.
"Economic and trade issues can only be correctly approached and addressed according to economic law," he said. "Politicizing economic and trade issues is absolutely unacceptable."
In his remarks, Treasury Secretary Paulson emphasized the benefits of the bilateral trade relationship.
"The United States is supportive of a stable and prosperous China," he said. "We are not afraid of competition. We welcome it because competition makes us stronger. It is therefore in our interests to support China's effort to open up its economy."
Morris Goldstein of Washington's Peterson Institute of International Economics says China's undervalued currency badly distorts the trade relationship. He says the Chinese currency should be permitted to rise 30 to 40 percent against the dollar. But he doesn't expect that to happen soon.
"I'd be surprised if we see anything more than the trivial movements we've seen in the last few years," he said.
Peterson Institute specialists say the United States now has the largest trade deficit of any nation in history, while China has the largest surplus.
