China warns U.S. against trade "confrontation"

BEIJING (Reuters) - U.S. "confrontation" with China will not solve trade friction between the two economic giants, Chinese state media said on Thursday, urging greater cooperation after talks failed to resolve key sticking points.

The China Daily said in an editorial that both countries bore responsibility for the trade gap between them and warned against U.S. impatience for a rapid cure.

"The dialogue made it clear that a confrontational approach focusing on so-called immediate results only complicates the situation and adds nothing to problem solving," it said.

China's economic growth was indeed too dependent on exports, it said, but it was also "all too obvious that the U.S. consumers spend too much and save too little, resulting in their country's current account deficit".

U.S. Treasury Secretary Henry Paulson claimed "tangible results" at the end of a "strategic economic dialogue" with Chinese Vice Premier Wu Yi in Washington on Wednesday.

But while economic policy chiefs from the two nations struck deals on civil aviation and financial sector access in their second such meeting, they made no headway on the volatile issue of Chinese currency reform, fuelling anger on Capitol Hill.

U.S. lawmakers said they would push forward proposals to slap tariffs on Chinese imports. They hope to force Beijing to revalue its yuan currency and redress the huge trade imbalance between the two pillars of global economic growth.

In July 2005, Beijing abandoned an 11-year-old practice of holding the yuan fixed against the dollar and revalued it by 2.1 percent.

Since then it has risen a further 6 percent, frustrating U.S. legislators worried about their country's trade deficit with China, which hit a record $233 billion last year.

The Chinese paper said "protectionism" could not fix the trade imbalance. "What's needed are painful but necessary structural changes in the two countries' economies."