China urges U.S. to do all it can to tame crisis

By Glenn Somerville and Zhou Xin

BEIJING (Reuters) - China urged the United States on Thursday to spare no effort to stabilize its economy and financial markets to help avert a global recession.

Speaking at the start of a fifth meeting of the cabinet-level "Strategic Economic Dialogue" between the United States and China, Vice-Premier Wang Qishan said Beijing was doing its part by pursuing fast growth.

U.S. Treasury Secretary Henry Paulson, whose term in office is rapidly drawing to a close, praised China for the responsible role it was taking to boost a fading global economy.

U.S. officials told reporters later that China gave reassurances that it remained committed to reforming its currency mechanisms along market lines. Washington wants greater currency flexibility to lead to a rise in the yuan's value, something it regards as essential to shrink China's huge trade surpluses.

"There's been progress. China continues to reinforce to us that they remain committed to reform," a U.S. official told reporters. "By that I mean appreciation over time."

Chinese central bank governor Zhou Xioachuan expressed confidence that China could sustain growth and financial stability, an official told reporters.

But Zhou said policy makers needed to take "timely, effective and pre-emptive measures. "In particular they need to prepare for the worst," Jin Qi, head of the bank's international department, quoted Zhou as adding.

FAST GROWTH

Earlier, Wang reiterated Beijing's position that the best way China can contribute to a healthier global economy was by growing maintaining its own fast growth.

"The priority is...to restore investor confidence as quickly as possible, to prevent the financial crisis from getting worse and to avoid a global economic recession," Wang said.

He said Beijing backed U.S. initiatives to steady world markets and said China was trying to achieve the same goal. But he urged Washington in return to heed Beijing's needs.

"I hope the United States will take all necessary measures to stabilize its economy and financial markets as soon as possible and to ensure the security of Chinese investments and interests in the United States," he said.

Stephen Green, head of China research at Standard Chartered Bank in Shanghai, said he was unsure how to read Wang's words.

But he noted that they came on the heels of a drop in the value of the yuan, engineered by the central bank, and a day after the head of China's sovereign wealth fund said America's constantly shifting regulatory landscape made him too nervous to buy into U.S. financial firms.

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