Hank Paulson called on the US and China to step up their co-operation on energy and the environment at the beginning of a two-day session of talks under the bilateral strategic economic dialogue.
“As the two largest net importers of oil, China and the United States face similar challenges as demand for energy increases and the global production capacity has remained relatively flat for the past 10 years,” the US Treasury secretary said.
“We have a strong and shared interest in avoiding supply disruptions, increasing energy efficiency, promoting the efficiency and transparency of the global energy markets to the benefit of all oil importing nations and expanding the availability and use of alternative energy sources.”
Mr Paulson had earlier told the Financial Times that the US would urge China to be more transparent about its oil stockpiles and the policies governing its strategic petroleum reserve.
“There is a natural overlap of interest between countries that are major importers of oil,” Mr Paulson said, speaking ahead of the two-day summit held as part of the ongoing US-China strategic economic dialogue.
The two nations will use the talks to flesh out the 10-year plan for co-operation on energy and the environment that was unveiled in Beijing in December. The focus will be on long-term issues but they will also discuss steps that could contribute to a less volatile oil market in the near term.
“Look at the ways in which we can and should co-operate,” Mr Paulson said. “Co-ordinating our strategic petroleum reserves, working with the International Energy Agency and among ourselves for more transparency.”
The US would like China to clarify that its strategic reserves exist to deal with disruptions to supply and will not be used to try to manage the oil price. US officials think more reliable information on Chinese stockpiles could help moderate oil market volatility.
In addition, the US will press China not to cushion the effect of higher oil prices through subsidies, allowing the price mechanism to reduce energy consumption
Mr Paulson said: “There are plenty of problems around the oil price being where it is today – speaking personally this is very, very unwelcome.”
The Treasury secretary made it clear that he wants to focus on the fundamental forces driving up the price of oil rather than the possible role of financial speculators.
“I would rather be dealing with some of these fundamental issues than tilting at windmills,” he said. These included the need to increase energy efficiency and develop new sources of energy.
Mr Paulson defended the strategic dialogue – his own creation – against critics who argue that it has achieved little.
He said there had been “reasonable progress” on a number of fronts, including currency appreciation and product safety.
Moreover, he said, “one of the most important economic relationships in the world has been kept on an even keel in times of tension”.
(FT)
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