The warm reception that Beijing has accorded visiting US Treasury Secretary Henry Paulson has raised hopes for smoother economic ties between the world's superpower and its biggest emerging power. Certainly, the symbolism attached by the Chinese side to Mr Paulson's visit has not been lost on observers. He was described as US President George W. Bush's special envoy, and President Hu Jintao and Premier Wen Jiabao went out of their way to meet him. Through these gestures, Beijing has indicated to Washington that it is keen to work with what it regards as an old friend of China to resolve differences between the two countries. As chairman of US investment bank Goldman Sachs before joining the Bush administration, Mr Paulson visited the mainland more than 70 times and came to know a large number of senior Chinese officials and businessmen. Among members of Mr Bush's cabinet, his knowledge of China is unparalleled. Beijing understandably hopes that Mr Paulson's expertise in the country's situation, including its need to rely on export-driven growth to stave off social unrest, would make him a better advocate for Beijing in Washington. Whether Chinese hospitality will make Mr Paulson's job of calming China bashers in Washington an easier one remains to be seen. The secretary has described his talks with state leaders as 'substantive' and 'enthusiastic'. But beneath his upbeat rhetoric about there being few differences on matters of principle between the two sides, the fact is that he has not been given any bacon to take home. A tough task now awaits Mr Paulson on Capitol Hill, where he will have to explain the 'fruits' of his visit ahead of crucial votes on proposed legislation to impose punitive tariffs on Chinese imports. Sponsored by two senior senators, the bills are aimed at forcing Beijing to quicken its pace in easing currency controls and allowing the yuan to appreciate. It is also significant to note that Mr Bush's choice to head the US team for the strategic dialogue between the two countries was a less senior diplomat, State Department under-secretary for political affairs Nicholas Burns. This suggested that, despite the fanfare that greeted the announcement by Mr Paulson and Vice-Premier Wu Yi of the new high-level economic dialogue, that Beijing's desire for all dialogue with Washington to be at the highest level was not shared by the US and that hurdles still remain in advancing relations between the two countries. By investing so much of its political capital in Mr Paulson, Beijing has arguably strengthened his hand. It will be that much more difficult for Beijing to stonewall tough American demands pushed by Mr Paulson, as it may not want to push an old friend into a corner or lose him as an interlocutor. The central government's strategy of gradually opening up the mainland economy to the outside has shielded the country from the turmoil that has visited many other developing nations. But its emergence as a major exporter of cheap manufactured goods has also made it a convenient scapegoat for job losses in the developed world. That has fuelled protectionist sentiments in many of its major export markets, notably the US and Europe. At this juncture, it is important for Beijing and Washington to be appreciative of one another's domestic difficulties as they manage their multifaceted relationship. The two countries' agreement to create a new 'strategic economic dialogue' is therefore most welcome. The mechanism will see Mr Paulson and Ms Wu meeting twice a year to work on bilateral and global issues such as trade, currency reform, intellectual property, energy and the environment. China is an emerging power that is widely seen in the US as a potential challenger to its superpower status. In managing their respective positions in the world, they are driven by common, as well as competing, strategic interests. It is vital for both to work together to resolve their differences, as the ripples caused by a row between them will be felt far and wide.