Critics in US Congress and some US business leaders claim the yuan is kept
undervalued, giving Chinese exporters an unfair advantage. Two key American
senators are calling for punitive tariffs on Chinese goods to force a change.
Paulson avoids talking directly about a stronger currency, saying
that a more flexible exchange rate is one of several reforms that Washington
wants to see.
And he argues that it is in Beijing's own interest to raise the yuan's value.
He says that would cut trade surpluses that are straining China's ability to
absorb the torrent of money flowing into its economy and boost the value of
ordinary families' assets.
In his appearance at Tsinghua, Paulson urged the government to open its
financial markets wider to competition. He acknowledged that some Chinese
securities firms might be forced out of business, but he said ordinary families
would benefit from healthier markets that would create new investment
opportunities.
"Investments should be producing 10 percent returns, not 2 percent (that
Chinese families earn) on bank deposits," he said.
Paulson told the students that, when he was a young Goldman
executive, his wife threatened to leave him if he didn't spend more time with
their two children.
He urged the students to make time for family, though he prompted laughter
when he admitted that he read bedtime stories to his own children in a
high-speed babble so that he could get back to work.
Paulson began his first trip to China as Treasury secretary with a stop
in the eastern city of Hangzhou to see a provincial party chief whom he knew from
his Goldman days.
Yet even as he tapped old contacts, Paulson was making new ones this week.
On Wednesday, he had lunch at the US Embassy in Beijing with seven Chinese
business leaders, including rising stars in the Internet, real estate and
insurance industries.
"The key to dealing with China," he said afterward, "is
to get access to the right people at all levels."
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