Beijing (AsiaNews/Agencies) – China and United States announced the establishment of a strategic economic dialogue yesterday as Henry Paulson, US Treasury Secretary since July, began a three-day visit to the mainland capital.

"Given growing economic globalisation and increasing bilateral economic relations, a high-level strategic economic dialogue between China and the United States will promote economic co-operation and the growth of China-US relations," the two sides said in a joint statement.

The issues on the table are wide-ranging, from intellectual property to the value of the currency. But US officials believe the new mechanism would commit China and the US to meet twice a year—switching the meetings between capitals— with the first meeting to be held before the end of this year.

Chine Premier Wu Yi welcomed Mr Paulson yesterday as an "old friend of China" and said that "the dialogue was proposed by Mr Bush in a telephone call to Mr Hu on August 21."

Mr Paulson knows China very well having visited it about 70 times in 30 years. "The relationship between the US and China is the most important bilateral economic relationship in the world today," he said. "It is a means to an end and this process will be judged by the results it achieves." He backs a broader economic dialogue with Beijing.

Mr Paulson will meet China's ministers of finance, commerce and health today after a debate with economics students at Beijing's Tsinghua University He is scheduled to meet Chine President Hu Jintao tomorrow.

The US Treasury secretary has always argued that, in order to remove capital controls and move to a more freely floating exchange rate determined by market forces, China must have a modern, fully functioning, market-based financial system. Similarly, China must phase out of its inefficient, non-productive state enterprises through a greater opening to foreign investments in every sector of the economy.

In his view reducing the US trade deficit requires increasing spending in China. A better consumer-credit system would unleash untapped savings and allow mainland consumers to use loans to buy many of the big-ticket items for which they now must save.

According to experts, the US and China together accounted for half of the world's economic growth over the past four years.

China is the fastest-growing market for US exports and the second largest source for American imports. (PB)