Auto bankruptcy "not a good thing": Paulson

WASHINGTON (Reuters) - Treasury Secretary Henry Paulson said on Tuesday that the U.S. auto makers cannot be allowed to fail, especially because the country is "far from through" the current economic situation.

"Given the state of our economic situation right now, given how fragile it is, I certainly don't believe -- and no one in our administration believes -- that bankruptcy of an auto company would be a good thing," he said at a meeting of the World Affairs Council. "We have been very much for a solution that avoids bankruptcy, but it's got to be leading to a viable industry."

China has been an important support to the country as it works to survive a financial downturn, Paulson said.

"The Chinese throughout this process and throughout our financial market challenges... have been very responsible partners and stakeholders and continue to stand by us and stand by our debt."

(Reporting by Lisa Lambert, Editing by Chizu Nomiyama)