U.S. Treasury Secretary Henry Paulson stressed Wednesday that the government
will oppose efforts in Congress to punish China for a trade gap with the United
States.
"Protectionist policies do not work and the collateral damage from these
policies is high," said Paulson while delivering his first speech on
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 the prosperity of the United States and China is tied
together 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."
He said that the United States must take a strategic view of its relationship
with China.
"Both in China and in the United States, 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 U.S.-Chinese relationship is truly
generational and demands a long-term strategic economic engagement on our common
issues of interest," he concluded.
In his speech, Paulson also said that the United States has nothing to fear
from China's emergence as a global economic power.
"The tasks faced by Beijing are so daunting that the biggest risk we face is
not that China will overtake the U.S., 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 secretary will visit China next week after attending the annual meetings
of the International Monetary Fund and the World Bank in Singapore on September
19-20.
During his stay in China, Paulson said that he will urge the Chinese
government to move more quickly to adopt economic reforms, including a more
flexible currency.
Paulson, 60, was nominated in May to replace former Treasury Secretary John
Snow, who resigned June 29. The former Goldman Sachs CEO was sworn in on July
10. He made more than 70 trips to China as head of the investment
giant.
