U.S. warns China on imports

WASHINGTON — Treasury Secretary Henry Paulson said Tuesday that the recalls of tainted Chinese products were causing fear among U.S. consumers. He called on China to take bold moves to address that and other economic problems facing the two countries.

He said both countries needed to work together to address safety issues that have been raised about a host of Chinese products from tainted toothpaste to toys containing lead paint.

"Recent and repeated reports of tainted food and product imports are causing fear and uncertainty in American consumers and harming the 'Made in China' brand here in the United States," Paulson said in a speech to the George H.W. Bush China-U.S. Relations Conference.

He said China needs to move aggressively to refocus its economy, fight off protectionist forces and address the growing concerns about tainted Chinese imports.

Wang Chao, an assistant minister of foreign affairs for China, said that the Chinese government was paying great attention to the issues of export quality and safety.

"The Chinese government has carried out thorough investigations and rigorously penalized the offenders," Wang said in remarks that followed Paulson's address.

Paulson said the effectiveness with which China addresses the safety concerns will have long-term implications for U.S.-China trade relations. He cautioned that policymakers in both countries should focus on science-based safety decisions rather than "protectionism or retaliation."

Last year, the administration began a new series of high-level talks with the Chinese aimed at addressing growing trade tensions between the two nations that have been triggered by America's record trade deficits with China. U.S. manufacturers and many members of Congress blame those deficits on unfair trade practices by the Chinese such as keeping the value of China's currency artificially low against the U.S. dollar to gain trade advantages.

Paulson said China should allow its currency to rise at a faster rate against the dollar, a change that he said would make it easier to implement other needed economic reforms in the country and to control rising Chinese inflation.

"Bold structural policies are needed to shift China's growth away from heavy industry, high energy use and dependence on exports towards greater reliance on domestic demand, greater production of services and greater provision of material well-being to China's population," Paulson said.

Paulson said that the needed reforms in China were being resisted by "increasingly influential Chinese businesses."

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