国内新闻：Paulson arrives for trade talks with China

US Treasury Secretary Henry Paulson arrived in Xining in northwest China last night, kicking off a four-day visit to China.

US Treasury Secretary Henry Paulson, pictured June 2007, arrived in China on Sunday. [AFP]

He is due to visit local environmental protection programs in Qinghai Province, home to Qinghai Lake, the largest salt water lake in China.

He will also visit rural households in the remote province on the Qinghai-Tibet Plateau, dubbed the "roof of the world."

Paulson, who heads to Beijing on Monday, will meet with government officials to discuss the US-China Strategic Economic Dialogue (SED) launched last year.

The forum covers a range of economic and environmental issues, but the issue at the forefront is China's yuan, which is seen by lawmakers in the United States as grossly undervalued.

Last week the Senate Finance Committee overwhelmingly approved a bill requiring the Treasury to identify nations with "fundamentally misaligned" currencies, potentially opening the door to economic sanctions against Beijing.

But Paulson said Friday that lawmakers were sending the wrong message by threatening to punish Beijing.

"We would like to see the Chinese move and show more flexibility," he said.

Paulson will also hold talks with President Hu over tensions arising from China's swollen trade surplus and other issues. The secretary also is to meet Vice Premier Wu Yi, who leads the Chinese side of the dialogue.

The last formal meeting of the economic dialogue in May ended with no progress.

Since then, China has announced measures to rein in surging export growth. It repealed rebates of value-added taxes on more than 2,000 types of goods ranging from cement to plastic products in June.

Last week, the government said it would limit the growth of its "processing trade," a big but low-profit segment of the economy that imports components and exports finished goods.

Paulson was due to leave China on Wednesday.