Paulson wants faster China yuan rise

SPEED IT UP

Paulson said China needs to accelerate the pace of market-based reforms, open up its economy more and allow the benefits of trade to be spread more evenly, though he acknowledged that Chinese businesses might resist.

"In my judgment, the greatest risk to China's long-term economic security is that protectionists prevail, and Chinese reforms proceed too slowly." he added.

Paulson helped initiate a so-called U.S.-China "strategic economic dialogue" and will travel to Beijing again in December to pursue trade issues.

He claimed the SED was useful in managing U.S.-China relations but said the United States needed to see "tangible progress" from China to demonstrate that the process was worthwhile.

Paulson told a questioner that foreign investment from China or anywhere else was welcome in the United States, and said he was not concerned that state-run sovereign wealth funds operated by China and others were a potential threat.

"I very much welcome investment in our country by all foreign nations, including China," Paulson said. He added that G7 industrial countries had discussed sovereign wealth funds at a dinner last Friday night amid speculation that they could potentially be used for political purposes.

However, Paulson said: "From everything I see, the intent and practice of either all or the vast majority (of sovereign wealth funds)...were economically driven."

The funds have grown into the trillions of dollars as countries like China and Middle East oil producers pile up huge surpluses from their trade with the United States and Europe, which they in turn reinvest.

(Additional reporting by David Lawder, Alister Bull and Mark Felsenthal)