US Treasury Secretary Henry Paulson defended Bush administration efforts to protect consumers from unsafe products from China and said close economic ties between the two countries were vital.

During a wide-ranging interview in which he said the beleaguered US housing market was bottoming out, Paulson conceded that American attitudes toward China had soured over what some US interests see as unfair trade tactics and worry about tainted food and other products.

"The perception of China in the US has been on the negative side for some time because many in the US are unhappy with the risks they see and some of the negatives they see in globalisation," Paulson said.

Concerns over the safety of Chinese products entering the US have climbed after a series of recalls and product bans on items as varied as children's toys to seafood and toothpaste, leading one lawmaker to call for an "import czar" to oversee import safety.

But Paulson said such a step was unnecessary.

"I frankly don't see the hole. I think it's being dealt with and I'm not sure that the answer to everything is creating another government position," he said.

Paulson, the administration's chief economic official, has made pursuit of Chinese currency and other reforms a signature issue since taking over Treasury nearly a year ago.

Where many Americans see threats posed by the Asian giant's growing economic might, Paulson sees opportunity.

"The fact that they're the world's fastest growing economy is something that some people (see) as a problem. I look at that as an opportunity that I'd like to capture," he said, adding China was the fastest growing market for US-made goods and services.

Paulson said he remains unhappy with the slow pace at which China's currency is rising in value -- a major irritant for US businesses who claim they cannot compete with cheap Chinese imports -- but he warned that alone won't cure a trade deficit with China that hit a record $233 billion last year.

He said Washington also was pressing Beijing to open its markets more fully to US goods and to financial services, an area where American firms have special expertise.

On other issues, Paulson indicated Washington has no intention of challenging a tradition in which Europe will pick a new leader for the International Monetary Fund to succeed Rodrigo Rato, who has said he will leave in the fall.

"We are very much in the listening mode and I want to see an outstanding leader," Paulson said. "I'm just going to be encouraging my counterparties around the world to select candidates that are going to be leaders of real stature that will be highly regarded in capitals around the world."

 The US has been in the forefront of countries pressing the IMF to sharpen its role in monitoring currency practices around the globe -- another way to pressure China, now the world's fourth largest economy and still booming, to let its yuan rise.

On the home front, Paulson said the US economy remains healthy, notwithstanding problems in subprime mortgage markets, some of which he attributed to a lowering of standards during a long period of prosperity and low interest rates.

"Borrowers need to be wary of the risks they're taking on in times of low interest rates, particularly if they haven't fixed their rates. Lenders need to be wary," he said. A downturn in housing markets, which has brought selling prices down, is "at or near the bottom," he added.

But Paulson, a former chairman of Goldman Sachs Group, who emphasized he closely monitors financial conditions, said that outside woes in the subprime sector, financial markets look sound and solid.

"Markets are volatile," he said. "I haven't seen a single thing that surprises me -- it's hard to surprise me." Reuters