China 'helping fight downturn'

US Treasury Secretary Henry Paulson has praised China for its "constructive" role in dealing with the global financial crisis and said Beijing will continue to be "an important engine" for the world economy.

The next US president should recognize China's important role in bolstering the world economy, he said on Tuesday. "As a matter of fact, today more than ever the world is looking to China to be a big contributor to global economic growth."

But many economists have urged China to be cautious in purchasing overseas financial assets because no one knows where the market is headed.

Speaking at the annual meeting of the US-China Relations National Committee in New York, Paulson echoed Premier Wen Jiabao's earlier statement, saying China would play a constructive and cooperative role in global efforts to deal with the financial crisis.

He stressed the importance of closer international cooperation as the financial crisis continued to take its toll across the globe.

Paulson said he had stayed in close touch with Vice-Premier Wang Qishan ever since the crisis began. Wang heads the international financial crisis committee, set up recently to deal with the financial crisis that has pulled China's economic growth down to 9 percent in the third quarter of this year from nearly 12 percent last year.

Referring to his talks with Wang, Paulson said: "Our conversations have been useful and constructive. It's clear China accepts its responsibility as a major world economy that will work with the US and other partners to ensure global economic stability."

Media reports have said Washington has urged Beijing to buy more US treasury debts and other financial assets to help stabilize its market.

This is where the economists have cautioned China. "Chinese people are not more knowledgeable than the Americans in this respect," Ha Jiming, chief economist of the China International Capital Corporation, told the Chinese Economists 50 Forum. "It's too early for the Chinese to take the risk." The forum drew some top Chinese monetary policymakers and advisers on Sunday to discuss ways to deal with the crisis.

"Chinese investors must be very cautious while buying US financial assets," said Cao Yuanzheng, chief economist of Bank of China International Holdings. "It's hard to fathom the US market right now."

Though some experts are worried that the crisis could hold China from taking forward its financial reforms, Paulson said: "There is a great opportunity for China to learn from our significant mistakes and move forward with reforms that have the potential to produce important gains for China and its people."

Paulson paid tribute to the China-US Strategic Economic Dialogue (SED), initiated by President Hu Jintao and his US counterpart George W. Bush in 2006. He said: "Our recent close communication and cooperation as we address the challenges in the financial market are a tangible example of the power and utility of an SED based on mutual trust."