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Paulson starts China trip on soft note
POSTED: 10:46 a.m. EDT, July 30,2007

U.S. Treasury Secretary Henry Paulson on Sunday acknowledged high trade tensions with China and said he would start a four-day visit by focusing on an issue with more common ground: the environment.

Aiming to keep his strategic economic dialogue with China on track amid controversies over Chinese product and food safety and currency legislation gaining momentum in the U.S. Congress, Paulson will visit Qinghai lake in western China on Monday before meeting President Hu Jintao and Vice Premier Wu Yi on Tuesday and Wednesday.

The lake and surrounding glacial watershed are threatened by global warming and encroaching desert, with Paulson saying the area was a strong symbol of the need for U.S.-China cooperation on environmental issues.

"There is much more tension in the trade area, so this is an important area where there is less tension and I think it's a good place to start this trip," Paulson told reporters on his plane on the way to China.

He said he would again press Hu and other top officials for faster appreciation of China's yuan currency and other reforms, such as moves to rebalance the Chinese economy away from exports and toward more domestic consumption and to increase foreign access to China's financial services sector.

Paulson's visit comes as U.S. lawmakers, frustrated with slow progress in reducing U.S. trade deficits with China, are advancing legislation aimed at pressuring Beijing to allow open markets to set the yuan's value.

The U.S. Senate Finance Committee last week passed a bill that would allow companies to seek anti-dumping duties against products from countries that have "fundamentally misaligned" currencies and eventually intervention by the Federal Reserve.

Many U.S. lawmakers and manufacturers believe the yuan is deliberately undervalued by 25 to 40 percent, keeping Chinese products cheap in U.S. consumer markets. Sen. Charles Grassley of Iowa, a Republican, said the bill would end the Bush administration's "pussyfooting" over the currency issue.

From: CNNMoney
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