UPDATE 1-US's Paulson to raise Tibet, currency with China

(Adds Pelosi Olympic remarks in Washington)

By Glenn Somerville

BEIJING, April 1 (Reuters) - U.S. Treasury Secretary Henry Paulson is expected to mix some politics with the usual economic issues when he meets top Chinese officials over two days at a time when Beijing's sensitivity about its image is already high.

U.S. officials said ahead of Paulson's Wednesday and Thursday visit that an expression of U.S. concern over Chinese treatment of protesters in Tibet was on the agenda, just as it was for any high-level U.S. official in contact with China.

While economic issues -- from investment to energy supplies and currency rates -- are the focus of Paulson's visit, it comes amid calls for actions up to and including a boycott of opening ceremonies for Beijing's summer Olympics.

In Washington on Tuesday, the speaker of the U.S. House of Representatives, Nancy Pelosi, left open the possibility that heads of state, including President George W. Bush, should boycott the August ceremonies because of the way China has dealt with unrest in Tibet.

But Pelosi told reporters she was "still hopeful that China will be responsive" to a series of requests, which, if fulfilled, would eliminate any need for such a boycott.

Those include Beijing entering into "sustained negotiations" on human rights protections for those in Tibet, independent monitors to look into the mid-March violence, direct dialogue with the Dalai Lama and medical care for those who were injured and "have been deprived of it," Pelosi said.

A U.S. boycott of the opening ceremonies, Pelosi said, "is something I should not take off the table but I am hopeful we will have something positive."

China's President Hu Jintao has said security for the Olympics is a top priority. Paulson is set to meet Hu on Wednesday but U.S. officials offered no guidance about specific issues he will raise with the Chinese leader.

In Washington last Friday, the Treasury's special envoy to China, Alan Holmer, said Tibet would come up. "All senior U.S. officials do raise our concerns with the Chinese with respect to Tibet and we'd expect this trip to be no different," he said.

Paulson flew to Beijing on Tuesday after unveiling a blueprint for streamlining regulation of U.S. financial services, a pressing concern because of the global credit crisis triggered by U.S. mortgage debt.

China, the export powerhouse that supplies whole U.S. retail chains, has indicated its special worry about the potential for global fallout if America's free-spending consumers become so wary that they tip the U.S. economy into recession.

"I am closely watching and feel deeply worried about the global economic situation, especially the U.S. economy," Chinese Premier Wen Jiabao said recently. Paulson is to meet Wen on Thursday, shortly before heading back to Washington.

Paulson was a China veteran long before taking over Treasury in mid-2006, making dozens of trips when he was chief executive of Wall Street investment bank Goldman Sachs, and has exceptional access to China's current and coming leaders.

He begins his visit on Wednesday by meeting Wang Qishan, the former Beijing mayor who was recently named one of four vice premiers by the National People's Congress, the largely ceremonial parliament.

Wang is expected to take charge of financial affairs, including directing the U.S.-China "strategic economic dialogue" that Paulson helped initiate.

Paulson has placed great emphasis on the need to use diplomacy to persuade China to adopt measures such as permitting its currency's value to rise, though U.S. lawmakers say it is still far undervalued.

Holmer said last week that China has permitted an "accelerated rate of appreciation (that) is welcome and appreciated" but Paulson is expected to take up the issue of speedier appreciation again in Beijing.

(Additional reporting by Richard Cowan in Washington)

(Reporting by Glenn Somerville; Editing by Ruth Pitchford and Bill Trott)