President Xi Jinping and American counterpart Barack Obama should use their low-key meeting in California to "reset" Sino-US relations and focus on mutual economic benefits, former US treasury secretary Henry Paulson said at the 12th Fortune Global Forum in Chengdu , Sichuan , yesterday.
Paulson, a former head of Goldman Sachs, described Xi as having a "different style and different tone" to his predecessors.
Xi landed in the US yesterday and will spend two days with Obama at Sunnylands in Rancho Mirage, California.
The setting, rare in the history of Sino-US relations, has attracted global attention from politicians and business leaders keen to discover clues about the development of political and economic ties between the world's two biggest economies.
"I think this meeting is very, very important," Paulson said. "What they need to do is to build the relationship, trust themselves and reach consensus. It's very clear we need to reset the relations between the US and China. It's now the most important bilateral relationship in the world.
"The cornerstone [of Sino-US relations] is the economic relationship. The top [leaders] can set the tone and I am hoping one of the things that will come out immediately is that their economic negotiators [can say] 'let's get some important things done'."
Paulson urged Beijing to focus more on long-term growth rather than on short-term economic targets and numbers, although he understood such changes in economic strategy and focus would be difficult.
"The current growth model is running out of gas," he said. "The future of the economy will be in the private sector. The difficulty is the economy's size. People don't like change. If there is not a crisis, it's hard to drive changes."
Paulson did not elaborate on what changes Beijing may need to make to improve its economic structure, but many industry watchers have complained about the monopolies held by many state-owned enterprises.
Even though the mainland's small and medium-sized private enterprises have contributed more than 60 per cent of the country's economic growth, many find it difficult to get loans from major state-owned banks.
Liberal mainland economist Wu Jinglian said last year that economic reform had "significantly slowed" since the start of this century, due partly to deep-rooted corruption.
"The good news is the expectations that Chinese people have are so high because now they have very strong leaders," Paulson said. "But the bad news is it is almost impossible to meet all their expectations."