U.S. Treasury Secretary Henry Paulson pinned hopes on upcoming visit to Washington by Vice-Premier Wu Yi to achieve agreements on trade and economic integration, billing the top Chinese woman trouble-shooter as a "force of nature".

Chinese Vice Premier Wu Yi speaks to the press in December 2006. China is expected to confront head on with the US Congress on the thorny issue of Beijing's undervalued currency, which American lawmakers complain is hurting the US economy.[AFP]

As a result of increasing American consumption of inexpensive but quality Chinese goods, the two governments are more or less getting locked in horns over an enlarging trade imbalance. Some in the Bush administration and at the U.S. Capitol Hill believe that China's currency is undervalued against the U.S. dollar, although the yuan has risen more than 5 percent in the past 18 months.

Secretary Paulson, speaking at a forum of top economists, scholars and government officials in Washington on Thursday, said he was looking for "signposts" of short-term progress during the second round of China-U.S. Strategic Economic Dialogue, scheduled to open on May 23 in Washington. Paulson will head the U.S. team; Chinese delegation will be led by Wu.

Madame Wu Yi is well-known in China and abroad for her toughness and efficiency in getting jobs done. Wu made a name in 2003 when she spearheaded China's efforts to stop the merciless assault of the Severe Acute Respiratory Syndrome (SARS), and is now entrusted by Beijing Central Government to fight IPR violation in China. During the previous Chinese government led by Premier Zhu Rongji, Wu led the efforts to curb then rampant smugglings.

Paulson said that private discussions that visiting Chinese officials plan with members of Congress will help both sides understand each other better.

"Now I happen to think it is a big positive that the Chinese would be here when Congress is in full session because they will have an opportunity -- Wu Yi is a very persuasive woman and she is a force of nature -- to go up and behind closed doors and talk with some of the key committees and leaders out there," Paulson told the forum.

The secretary did not make any predictions that China would accelerate its pace of currency reform, which U.S. manufacturers see as critical for trimming the huge U.S. trade deficit with China.

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"We are focused on long-term goals while simultaneously looking for short-term results," Paulson said. He said he would look for short-term achievements as "signposts along the way" that the new high-level talks are working.

China has already achieved a benefit, Paulson said, with the U.S. now favoring China's membership in the Washington-based Inter-American Development Bank, which supports development projects in Latin America.

He said that other areas of discussion include an agreement that would increase commercial airline flights between the U.S. and China, and efforts to improve environmental protections in China through such projects as developing cleaner-burning coal-fired electric generating plants.

In an effort to demonstrate that current U.S. laws can deal with China, Bush administration in recent weeks has filed two trade cases against China with the World Trade Organization and for the first time imposed penalty tariffs on Chinese paper products in a dispute over alleged government subsidies.

The Chinese delegation is also expected to meet with President Bush.

Paulson said although he detected growing concerns among US lawmakers during meetings with them on the Chinese currency problem, "people are still open minded" about the importance of "making progress through negotiations."

In his speech to the forum, Paulson warned against American protectionism.

"I am a very strong believer that trade benefits us greatly and isolation and protectionism is going to hurt our standards of living and hurt people at all income levels, particularly the average workers," Paulson said.