U.S. Treasury Secretary Henry Paulson said Tuesday that China should embrace more market oriented policies to avoid losing control of its rapidly growing economy.

Paulson - speaking at the George Bush China-US Relations Conference in Washington, named after the current President's father - also repeated previous statements that China should let its yuan currency rise. A cheaper yuan allows Chinese manufacturers to export their products at lower prices overseas. Politicians in the U.S. have said this is one of the main factors in record trade deficits with China.

Paulson said in a question and answer period following his speech that China was moving slowly, not reflective of economic fundamentals.

He said possibility of sustainable economic growth in China would be "greater" if China would increase the speed of the Yuan's rise in the short term. China has previously rebuffed attempts to let its currency rise too much out of concern that it would destabilize the Chinese economy.

Paulson and the Treasury department are engaged in a series of twice-a-year, high-level talks with China called the Strategic Economic Dialogue. He introduced the talks to help both nations speak directly about issues such as China's currency and Chinese banking sector issues.