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Paulson calls for U.S.-China energy alliance

Treasury Secretary Henry Paulson called Thursday for closer U.S.-Chinese cooperation on energy conservation and for Beijing to cut import duties on environmental technology.
/ Source: The Associated Press

Treasury Secretary Henry Paulson called Thursday for closer U.S.-Chinese cooperation on energy conservation and for Beijing to cut import duties on environmental technology.

Speaking at a government think tank in the midst of a trip to discuss trade and other contentious issues, Paulson lauded China’s recent steps to tighten environmental rules and said it could become a leader in deploying advanced technology for conservation.

“Technology must be developed and adopted at a faster pace,” Paulson said, according to a text of his speech distributed by the Treasury Department. “U.S. and Chinese institutions need to manage the new demands of energy and environmental issues in innovative ways.”

Washington and Beijing agreed in December to cooperate over the next 10 years on climate change, energy security, promoting sustainable use of natural resources and other environmental issues.

The United States and China are the world’s top two oil consumers.

“Only through greater cooperation will we be able to better organize our efforts and target some of the most pressing issues that the United States and China will face in the coming decade,” Paulson said.

Paulson met Thursday with Premier Wen Jiabao, who affirmed Beijing’s commitment to the U.S.-Chinese Strategic Economic dialogue, which was launched in 2006 to address strains over China’s soaring trade surplus and defuse demands by American critics for punitive action. The next full meeting of the dialogue is in June.

“It can not only enhance out mutual trust but solve problems and difficulties in our economic and trade ties,” Wen said as reporters were allowed to watch the beginning of their meeting. “The mechanism can also set the long-term direction for our economic cooperation and design the details, and therefore it’s of great importance.”

No details of their talks were immediately released.

On Wednesday, Paulson met Chinese President Hu Jintao and Wang Qishan, Beijing’s new point man on trade ties with Washington. Paulson calls Wang, a former star Chinese banker, a friend and says their relationship should help to produce a smooth transition in the economic dialogue following the retirement of his predecessor, Vice Premier Wu Yi.

In the speech Thursday, Paulson repeated a key theme of his trip — the need for Beijing to push ahead with liberalizing its state-dominated financial industries. He said Wednesday that the U.S. credit crisis might be making Chinese leaders hesitant.

“A deep and more efficient financial sector will help Chinese households earn a higher return on their investments and thus achieve their financial goals,” he said.

Referring to China’s efforts to curb inflation by freezing retail prices of gasoline and diesel, Paulson warned that the United States ran into problems in the 1970s with price caps that led to heating oil shortages and rationing.

“China, by setting price controls on fuel, is facing similar consequences today” with widespread shortages, he said. “And because market forces can never be completely eliminated, price controls often lead to smuggling and corruption.”

Paulson said China could benefit from importing technology to improve energy efficiency, reduce greenhouse gas emissions and supply cleaner water. But he said that is hindered by high tariffs and other import barriers.

“A high priority should be given to eliminating tariffs and non-tariff barriers on products, goods and services that can improve the health and welfare of the Chinese people,” he said.