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U.S.-China partnership vital to both nations, says Treasury secretary

This article first appeared in the St. Louis Beacon: August 20, 2008 - The final Olympic gold medals are not the only assets up for grabs in Beijing. On Tuesday, U.S. Secretary of  the Treasury Henry Paulson discussed the need for constant engagement with China in a phone interview organized by the Council on Foreign Relations.

Paulson was instrumental in fostering official channels of contact with China in the form of a U.S.-China Strategic Economic Dialogue (SED). In an article, "A Strategic Economic Engagement," Paulson discussed how the SED lays the framework for the next president to engage with China on all issues.

SED meetings are spearheaded by Paulson and his Chinese counterpart, Vice Premier Wang Qishan, and include top members of various economic agencies and ministries.

"The U.S. bilateral relationship with China is very important in that our interests and China's intersect in every important issue facing the world today -- economic, national security, the environment, foreign policy," Paulson said. "Neither of us will accomplish all we want unless we are willing to work with each other ... The path that China chooses will affect the United State's ability to achieve its goals. We believe very much in engagement ... Shared goals build the foundation for resolving tension."

Although the U.S. and China disagree on issues, such as civil rights, Paulson said it is imperative to focus on similarities, such as shared economic goals. "Approaching China through economic issues is in effect a way to get tangible results in the economic and non-economic areas," Paulson said.

Some American economists worry that China will overtake the United States economically, but Paulson doesn't see this as a problem. "Some people look at China's economic success as a threat," something that "we need to contain," Paulson said. "These people are worried about the wrong thing, and frankly, China's continued economic growth is important to global economic growth and is a positive for the United States. The real concern should be that if China stumbles, has problems along the way, this will hurt the global markets, the global economy and our economy."

American engagement with China should focus on urging the Chinese to continue economic reform and to open up more markets. "We must work to convince them that the risks are greater in moving too slowly as opposed to moving too quickly," Paulson said.

According to Paulson, SED talks have resulted in progress in currency appreciation and oil subsidies. "We talk about how counterproductive it is to have subsidies for oil. I was gratified that while Wang Qishan was still in the country, after the last SED, they announced the reduction of the subsidy of their oil."

The two countries, top carbon emitters, are also working on a 10-year roadmap for dealing with environmental issues. That's something a new administration will pick up in January.

Despite questions from an Associated Press reporter, Paulson said he would not discuss his decision to bail out Fannie Mae and Freddie Mac.

Joy Resmovits is an intern at the Beacon.