US Treasury Secretary Henry Paulson met yesterday with Beijing's new point man on strained trade ties with Washington amid Chinese alarm about the US credit crisis and its possible impact on China's banks and economy.
Chinese Vice Premier Wang Qishan (王歧山), a former star banker whom Paulson calls a friend, expressed sympathy with the secretary's struggle to calm US markets.
"You looked very tired and worn out on TV. As an old friend, I would say that I was concerned," Wang said as reporters were allowed to watch the last few minutes of their talks at the Great Hall of the People, the seat of China's legislature. "But now I see you here this morning and you are glowing and robust."
Details of the meeting were not immediately released.
Paulson's visit to talk about US-Chinese cooperation on trade, energy and the environment has been overshadowed by alarm at the credit crisis triggered by defaults on subprime mortgages.
Chinese Premier Wen Jiabao (溫家寶), China's top economic official, declared himself "deeply worried" last month about the US market turmoil, the decline of the US dollar and "where the US economy is heading."
Chinese banks hold risky US mortgage-backed securities and have set aside reserves for possible losses.
Economists have cut China's growth forecast this year because of slowing US demand for Chinese goods.
Also, Washington's decision to respond to the crisis by cutting interest rates has complicated Beijing's effort to cool its fast-growing economy by raising its own rates.
Economists say that if the gap between rates in the two countries grows too large, it could draw foreign money into China, fueling inflation that is already at an almost 12-year high.
Paulson was in Beijing to prepare for the next meeting of the US-Chinese Strategic Economic Dialogue, scheduled for June. The process was launched in 2006 to address trade tensions and deflect pressure from US critics for punitive action over Beijing's huge trade surplus and currency controls.
Wang, former president of a Chinese state-owned bank, succeeded retired Vice Premier Wu Yi (吳儀), China's top problem-solver, as Paulson's counterpart. Wang's new duties also include reforming China's state-run banking and finance system.
Paulson is the most senior US official to visit Beijing since protests in Tibet and the government's crackdown. Washington has appealed to Beijing for restraint and to consult with representatives of the Dalai Lama, the exiled Tibetan leader.
Paulson was also scheduled to meet with Wen and Chinese President Hu Jintao (胡錦濤), a reflection of the importance Beijing places on the process aimed at averting threats to China's access to US markets for its exports.
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