- The Washington Times - Monday, September 18, 2006

SINGAPORE — On the eve of his first official visit to China, U.S. Treasury Secretary Henry M. Paulson said yesterday that he is worried about protectionist sentiment there and in other countries.

“One of the things I worry about in relation to China is protectionist sentiment, but that’s not limited to China,” Mr. Paulson told reporters a day before he was to travel there for a four-day visit, his first since taking over the top job at the U.S. Treasury in July.

Mr. Paulson didn’t elaborate, although recently China has instituted a series of obstacles for foreign businesses eager to invest in the fast-growing country.

In recent months, Beijing has placed limits on real-estate investment, tightened controls on mergers and acquisitions, and toughened restrictions on some kinds of foreign investment.

Last week, it released regulations requiring foreign news agencies to distribute articles, photos and other services through the government’s Xinhua News Agency.

Mr. Paulson has been in Singapore since the end of last week to attend a regular gathering of Group of Seven finance ministers and to participate in the International Monetary Fund and World Bank annual meetings.

He has used the trip as a platform to express support for efforts to reform the IMF, resume world trade talks, calm fears that a slowing U.S. economy may curb global economic growth and raise awareness of the need to combat terrorist financing.

In Singapore, he has also tried to portray his China trip in as low-key a fashion as possible and lower expectations for major breakthroughs.

“I am not looking for immediate solutions or quick fixes to any particular economic issue,” he said. “I’m looking to set a tone and an expectation of working through issues and making progress.”

The U.S. and other major trading partners have urged China to make its yuan exchange rate more flexible. They contend that foreign-exchange restrictions keep the yuan artificially cheap, boosting China’s exports and contributing to its trade surplus, which reached a historic high of $102 billion last year and has continued to rise.

Mr. Paulson declined to say what he considers an appropriate exchange rate for the Chinese yuan against the U.S. currency.

He did say, however, that a strong dollar is “clearly in our nation’s interest” and that the U.S. must do more to address its low savings rate.

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