China and the United States agree on the benefits of trade and see protectionism as counterproductive, China's Commerce Minister Chen Deming said here Wednesday.

    During the discussion on trade and competitiveness, both sides agreed that international trade is the best way to allocate national resources, Chen told reporters on the sidelines of the 4th round of the Sino-U.S. Strategic Economic Dialogue (SED) here.

    U.S. Secretary of Commerce Carlos Gutierrez asserted the point by highlighting the relationship between the competitiveness of a corporation and the openness of a country as a whole, added Chen.

    The Chinese commerce minister made his case by describing how U.S.-China trade had benefited both countries in the 29 years since the establishment of formal diplomatic relations, with two-way trade growing 120-fold during this time.

    Quoting a study by the U.S.-China Business Council, an organization of U.S. firms doing business in China, he said U.S.-China trade has helped reduce inflation in the U.S. and increased the household disposable income of Americans.

    The Chinese side understands U.S. concerns about the quality and safety of imported Chinese goods, but warns against abusing and manipulating the issue as a pretext for trade protectionism, Chen said.

    China is willing to make more overseas investments, including expanding investments in the U.S., which will help China create a better international balance of payment and enhance global economic stability, he added.

    Chen noted that a number of private Chinese businesses have made investments in the U.S. and contributed to the American economy.

    The two countries are also working on a bilateral investment protection agreement, he disclosed.

    Expressing hope that the U.S. government would relax hi-tech export restrictions, settle trade disputes through negotiation and push forward multilateral trade talks jointly with China, Chen urged the U.S. to recognize China's market economy status.

    Chen said he expects the SED process to move forward even as a new U.S. government takes over next year, since maintaining a good trade relationship with China is central to U.S. national interests.

    Visiting Chinese Vice Premier Wang Qishan and U.S. Secretary of Finance Henry Paulson are co-chairing the SED meeting as special representatives of the state leaders of the two countries.

    Participants at the June 17-18 meeting include minister-level officials and other senior officials from the two governments.

    The two-day discussions focus on five specific areas: financial and macro economic management, developing and protecting human capital, the benefits of trade and open markets, enhancing investment, and advancing joint opportunities for cooperation in energy and environment.