Hank Paulson: China economy has 'run out of steam'

China and the US should cooperate to speed up reforms and fight against the slowdown of the second largest economy in the world, said Hank Paulson's former finance minister.

"They have an economic model that is to" release the steam. "They have to rely much more on domestic growth led by domestic consumption," he told CNBC from Seattle, where Chinese President Xi Jinping.

The Chinese government recently received criticism for its work on the weak economy and chaotic stock markets, including actions to ease monetary policy and devaluation of the currency. Paulson argues that cooperation and investment between China and the US will not only help to boost economic activity, but also to address the growing concern by cyberattacks launched from China land.

Paulson stressed that cooperation is crucial for China to change its economy. He said that US companies currently have concerns about "the pace of reforms" and China needs to open its doors to more foreign companies.

He argues that we need more competition to stimulate China's transition from export-driven economy to one focused on domestic consumers.
"The only way to have real competition which would benefit the Chinese economy is open to foreign competition, so you have the best business and the most efficient companies competing there," said Paulson. "This is the key. This is what businesses in the US will insist."

E.Dimitrov JrTrader