"In recognition of the importance and complexity of the US-China economic relationship, a year ago September President Bush and President Hu created the SED."

"Their intent was not to replace the many economic dialogues already taking place, but to create an over-arching, senior level forum that was both comprehensive and strategic."

He went on to add: "Over the last year, we have built stronger relationships and established constructive channels of communication that didn't previously exist. These innovations have helped keep the US-China economic relationship on an even keel and helped us manage difficult issues, even in times of tension."

Paulson continued: "Through the SED, we have broadened our bilateral economic agenda to include food and product safety, energy efficiency and security, and environmental sustainability. All three carry deep implications for our economic ties."

"American consumers need to have confidence in the safety of the products they purchase, whether produced at home or abroad. China's management of food and product safety issues will have a long-term impact on our trade relations, the sustainability of China's growth strategy and its further integration into the global trading system."

"US and Chinese government agencies have been working together to address these safety issues – a hallmark of the constructive, cooperative and candid nature of our broader relationship."

On the issue of balanced economic growth, the US Treasury Secretary observed that:

"One of the most pressing and important issues – for the United States, China and the global economy – is China's move to a more flexible exchange rate policy. A more flexible currency is especially important now, when the risks of inflation are clearly rising in the Chinese economy. Increased currency flexibility would allow China's central bank to use the powerful tool of monetary policy for China's financial and price stability.

In conclusion, Paulson announced that:

"The agreements we have achieved thus far are like signposts showing progress along the mutually-beneficial economic road. While progress has not been as rapid as we would like, these signposts point the way to further benefits for the American and Chinese people. To turn back on, or away from, this road would jeopardize our long-term strategic interests for short-term political expediency."

"To succeed, the steps and policy actions must make sense to both sides. That is the purpose of economic dialogue, to listen openly to China's views and, in return, they listen openly to ours. I am ever mindful of the complexity of working with a sovereign economic partner upon whom we rely, and who relies on us, to urge them to take difficult, internal actions which we believe are economic imperatives. It is economic diplomacy, writ large, which has potential, perhaps far beyond what we can envision today, for greater global economic prosperity."