US treasury secretary Henry Paulson leads a delegation next week for the third round of the US-China Strategic Economic Dialogue in China next week. The high-level talks will focus on down-to-earth issues like food and product safety, Paulson said on Friday 7 December, notwithstanding the fact that currency valuation issues are among the foremost on the participants' minds.

The talks - for which the US team includes US trade representative Susan Schwab, commerce secretary Carlos Gutierrez, health and human services secretary Mike Leavitt, acting agriculture secretary Chuck Conner and Environmental Protection Agency head Stephen Johnson - will take place on 12 and 13 December in Grand Epoch City, about an hour outside Beijing. Leavitt will lead the talks on product safety, Paulson said.

In a series of television appearances ahead of the talks, Paulson conceded the forum's bid to keep economic relations ''on an even keel'' has taken an unexpected turn. He said when the talks were planned in September, none of his team members at that time saw product safety, food safety, and the whole integrity of trade as the key issue it is today.

But the discovery of tainted food items and dangerous children's toys imported from China fanned US consumer anger earlier this year. The US's initial goal was to push China to let its currency rise further. Paulson used every opportunity to call for faster currency reform. But the controversy over food safety has somewhat overshadowed other issues. ''China has recognised the need to appreciate their currency and for greater currency flexibility,'' Paulson said.

He said the pace of change has accelerated, and the yuan had moved up about 6 per cent over the last year. ''But they need to move it more quickly,'' he added. Paulson said there was a ''growing awareness around the world'' that China needed to adopt a more flexible currency management system to replace the present tight controls on its exchange rates.

European officials have just returned from a visit to Beijing where they tried to impress on the authorities that China's yuan, also called the renminbi, should rise further in value, but it remains to be seen whether the bid was successful. Analysts say that the countries representing China's main export markets should join forces to make their case, to be more effective.

Like American manufacturers have been doing for years, European producers are increasingly protesting they cannot compete with Chinese imports, because they are unfairly priced cheaply, sometimes below costs. China's response is that Europe should complain to the Bush administration, because the sagging US dollar is the main reason for the euro's soaring value.

The talks take place right after another set of bilateral discussions, called the Joint Commission on Commerce and Trade (JCCT), that are scheduled in Beijing on Tuesday 11 December. Two agreements will be signed with China next week to ensure that food, animal feed, drugs and medical devices that China exports to the United States meet US safety standards.

Chinese food exports to the US have grown rapidly in recent years. The single biggest category, seafood, has more than doubled since 2001 to nearly $1.93 billion in 2006. In addition, imports of animal feeds and food grains from China reached $195 million last year, more than six times the 2001 total.