The United States should consider lifting trade and investment barriers targeted at China to improve economic relations, now that Beijing's steps to alleviate the imbalance in bilateral trade have achieved results, Premier Wen Jiabao said yesterday.

Chinese Premier Wen Jiabao meets with visiting US Treasury Secretary Henry M. Paulson in Beijing, April 3. He urged the United States to lift export restrictions that affect China and reduce trade and investment barriers to promote bilateral trade relations. (Xinhua Photo)

He made the remarks during a meeting with visiting US Treasury Secretary Henry Paulson at the Great Hall of the People, two hours before the US top trade envoy wrapped up his two-day visit in preparation for the Sino-US Strategic Economic Dialogue (SED) in Washington this summer.

Economic and trade cooperation is an important foundation of Sino-US relations, Wen said, adding that bilateral cooperation in the fields of trade, investment and finance has reached high levels.

Wen said he hoped the US could loosen restrictions on exports to China and lift other economic barriers, to promote the sound and stable development of bilateral economic and trade relations.

Wen's call comes amid the US imposing curbs on exports of a number of hi-tech products to China - citing security reasons - which is believed to be one of the major factors behind the trade deficit the US suffers with the country.

Triggered by the US subprime crisis, the world economy is also set for a slowdown this year.

The International Monetary Fund cut its forecast for world economic growth this year from 4.1 percent to 3.7 percent, the lowest since 2002. The economic downturn is in turn expected to affect China's external demand and reduce its growth prospects.

During the 40-minute talks, Wen added that reinforcing cooperation in energy and environmental protection is vital to the sustainable development of both countries and the global economy.

The Chinese side would like to make concerted efforts with the US to strengthen cooperation and policy coordination, and push forward relevant projects in the two fields to make them new points of growth in bilateral economic cooperation, he said.

Considering the complex international political and economic situation, Wen said both sides should deepen mutual understanding and cooperation to face the challenges together and push forward peace, stability and prosperity throughout the world.

To that effect, Wen spoke highly of the SED mechanism, saying it was an important channel for the two nations to boost strategic mutual trust and develop mutual benefit and cooperation.

Paulson in turn briefed Wen on the US economy, adding that mapping out energy and environmental cooperation is the right choice for the mutual benefit of both sides.

The success of the SED mechanism is also in the interests of both countries, said Paulson, adding that the US side attaches great importance to continuing the dialogue and would like to make joint efforts with China to push forward the mechanism.

Following his meeting with the premier, Paulson conducted a 15-minute talk with Vice-Premier Wang Qishan, his Chinese counterpart in co-chairing the upcoming SED session in Washington.

Yuan appreciation

Paulson said yesterday that the appreciation of the yuan has been "more rapid".

"The yuan is appreciating and I think it's a very important and very wise step," he told China Daily yesterday in an exclusive interview, adding that the trend is in the interest of China.

For one, a faster appreciation of the yuan can help China fight rising inflation, he said.

His comments follow the country experiencing a 12-year high of 8.7 percent in its consumer price index, a key gauge of inflation, in February.

The yuan itself appreciated by 4 percent in the first quarter, compared with a 6.9 percent rise in its value for the whole of last year. Many economists have forecast that it may rise by 10 percent or higher this year.

An appreciation of the yuan may reduce the costs of China's imports and help ease inflation, analysts have said.

But many Chinese economists have also warned that a rapid appreciation of the yuan could damage the Chinese economy by dampening exports and reducing employment.

US treasuries

Paulson also said that the US appreciates China's holding of US treasuries.

China is holding about $490 billion in US treasuries, according to US Treasury figures. A number of US politicians have warned that such an amount threatens US economic security.

But Paulson said it is not a problem.

"We trade $500 billion treasuries a day," he said.

Paulson stopped short of predicting when the US economy would step out of recession, but believed it has a "resilient and diverse" economy.

"I'm an optimist ... We are making progress and working our way through it (the recession)," he said.

(China Daily April 4, 2008)