China, U.S. both 'losers' in confrontation, Premier Wen says

Jan. 28 -- China and the U.S. will both be losers if the two fail to cooperate in solving the financial crisis, Premier Wen Jiabao said.

Wen said he has expressed interest in having "early contacts" with President Barack Obama's administration amid the global recession, making the comment days after new U.S. Treasury Secretary Timothy Geithner accused China of manipulating the value of the yuan.

Clashes over China's currency have threatened to stoke tension between two of the world's biggest economies and undermine efforts to counter the recession. Officials from China's Ministry of Commerce and central bank last week rebutted Geithner's comments.

"A peaceful and harmonious bilateral relationship between these two countries will make both winners," Wen said during an address during the World Economic Forum in Davos, Switzerland. "A confrontational one will make both losers."

China's number-two official reiterated calls for developing nations to have more weight in international financial institutions, saying the current crisis "has fully exposed the deficiencies" in the global system and regulatory structures.

Trade protectionism would prolong the crisis, Wen said. Low savings, high consumption and insufficient financial supervision and regulation in "some economies" are the major causes of the economic downturn, he said, without specifying.

Efforts by China to stimulate its economy, including 4 trillion-yuan ($584 billion) of spending on projects including infrastructure are "beginning to produce results," and the government's 2009 growth target of about 8 percent is attainable, though a "tall order," Wen said.