April 2, 2008
Paulson Again Urges China to Open Financial Market
By THE ASSOCIATED PRESS
BEIJING (AP) — Treasury Secretary Henry M. Paulson Jr. urged Chinese leaders on Wednesday to press ahead with changes to their financial market but acknowledged the tight credit markets might make them hesitant.
Mr. Paulson met with the Chinese president, Hu Jintao, and Beijing’s new point man on trade ties with Washington, Wang Qishan. Mr. Paulson said he assured them that Washington was trying to resolve its credit crisis but cautioned it was no finished and there would be ”more bumps in the road.”
“There is no doubt that what is happening in the U.S. markets clearly has to give the Chinese pause,” he said. “They may be too polite to say that directly. But it clearly has to be giving them pause.”
Mr. Paulson, who was in Beijing as part of a dialogue on trade and other contentious issues, said the two sides discussed financial reform, though he declined to say what Chinese officials said.
He said once again that Beijing must open its financial markets wider to competition if it wanted to continue to develop.
“They have headed down the path to a market economy, and capital markets are a very powerful force for good,” Mr. Paulson said. “Until they have efficient, competitive capital markets, their people will not receive adequate returns on their savings.”
China’s top economic official, Prime Minister Wen Jiabao, said last month that he was “deeply worried” about the market turmoil, the decline of the dollar and the direction of the American economy.
Mr. Paulson said he told Chinese officials the United States was going through a “period of turmoil” but is fundamentally strong.
However, he said, “I continue to think there will be some more bumps in the road.”
Chinese banks hold risky mortgage-backed securities and have set aside reserves to cover losses. Economists have cut growth forecasts for China because of slumping American demand for imports.
Mr. Paulson was scheduled to meet Mr. Wen on Thursday, a reflection of the importance that Beijing places on access to American markets.