The Bush administration will oppose efforts in Congress to penalize China for its trade surplus with the US, Treasury Secretary Henry Paulson stressed in Washington on Wednesday.
"Protectionist policies do not work and the collateral damage from these policies is high," said Paulson while delivering his first speech on the international economy since he took up the post in July.
"By closing off competition and blocking the forces of change, protectionism reduces the losses of the present by sacrificing the opportunities of the future," he said. "We will not heed the siren songs of protectionism and isolationism."
Paulson said that both powers' prosperity is linked in the global economy, and "how we work together on a host of bilateral and multilateral issues will have a significant impact on the health of the global economy."
"Both in China and in the US, we must not allow ourselves to be captured by harmful political rhetoric or those who engage in political demagoguery," Paulson stated.
"Instead, we must realize that the US-China relationship is truly generational and demands a long-term strategic economic engagement on our common issues of interest," he concluded.
The US is China's largest export market and the second-largest trade partner. Sino-US trade volume reached US$211.6 billion in 2005 with China registering a surplus of US$114.2 billion, the cause of Congress' ire.
In his speech, Paulson also said that the US has nothing to fear from China's emergence as a global economic power and that their relationship should be subject to a strategic view from the US.
"The tasks faced by Beijing are so daunting that the biggest risk we face is not that China will overtake the US, but that China won't move ahead with the reforms necessary to sustain its growth and to address the very serious problems facing the nation," he said.
The treasury secretary will visit China next week after attending the September 19-20 annual meetings of the International Monetary Fund and the World Bank in Singapore.
During his stay in China, Paulson said that he will urge the Chinese government to progress more swiftly with economic reforms, including a more flexible currency.
Paulson, 60, was nominated to his post in May to replace John Snow, who resigned on June 29. The former Goldman Sachs CEO, who was sworn in on July 10, made more than 70 trips to China as head of the investment giant.
(China Daily September 15, 2006)