(Adds comments by U.S. officials and Chinese central banker)
By Glenn Somerville and Zhou Xin
BEIJING, Dec 4 (Reuters) - China urged the United States on Thursday to spare no effort to stabilise its economy and financial markets to help avert a global recession.
Speaking at the start of a fifth meeting of the cabinet-level "Strategic Economic Dialogue" between the United States and China, Vice-Premier Wang Qishan said Beijing was doing its part by pursuing fast growth.
U.S. Treasury Secretary Henry Paulson, whose term in office is rapidly drawing to a close, praised China for the responsible role it was taking to boost a fading global economy.
U.S. officials told reporters later that China gave reassurances that it remained committed to reforming its currency mechanisms along market lines. Washington wants greater currency flexibility to lead to a rise in the yuan's value, something it regards as essential to shrink China's huge trade surpluses.
"There's been progress. China continues to reinforce to us that they remain committed to reform," a U.S. official told reporters. "By that I mean appreciation over time."
Chinese central bank governor Zhou Xioachuan expressed confidence that China could sustain growth and financial stability, an official told reporters.
But Zhou said policy makers needed to take "timely, effective and pre-emptive measures. "In particular they need to prepare for the worst," Jin Qi, head of the bank's international department, quoted Zhou as adding.
FAST GROWTH
Earlier, Wang reiterated Beijing's position that the best way China can contribute to a healthier global economy was by growing maintaining its own fast growth.
"The priority is...to restore investor confidence as quickly as possible, to prevent the financial crisis from getting worse and to avoid a global economic recession," Wang said.
He said Beijing backed U.S. initiatives to steady world markets and said China was trying to achieve the same goal. But he urged Washington in return to heed Beijing's needs.
"I hope the United States will take all necessary measures to stabilise its economy and financial markets as soon as possible and to ensure the security of Chinese investments and interests in the United States," he said.
Stephen Green, head of China research at Standard Chartered Bank in Shanghai, said he was unsure how to read Wang's words.
But he noted that they came on the heels of a drop in the value of the yuan, engineered by the central bank, and a day after the head of China's sovereign wealth fund said America's constantly shifting regulatory landscape made him too nervous to buy into U.S. financial firms.
SHOT ACROSS BOWS
All in all, Green said, China could be firing a shot across America's bows. "It would seem to suggest a more robust response in this round of talks," he said.
There is long-standing concern in some Chinese circles about Washington's stewardship of the dollar, unease at the pressure the United States puts on Beijing over the yuan and a constant debate over whether China should add to its U.S. debt holdings.
Beijing holds more than 60 percent of its $2 trillion of reserves in dollar assets, with a big chunk in debt issued by the Treasury and troubled mortgage lenders Fannie Mae and Freddie Mac, which have effectively been taken over by the government.
Despite their concern over the health of Fannie and Freddie, senior officials have reiterated that it is in China's self-interest to keep investing in U.S. government securities.
But critics worry that, with Washington pursuing aggressive fiscal and monetary expansion, the value of those bond holdings will eventually be eroded.
CONCRETE RESULTS
The United States is now officially in recession, as is much of Europe, and Paulson noted the financial crisis that originated in U.S. subprime mortgage lending markets is truly "a global event" that requires a global response.
"International cooperation and coordination have been robust, and we appreciate the responsible role China has played during the turmoil," he said.
China has launched a 4 trillion yuan ($586 billion) stimulus package and slashed interest rates to boost domestic demand and take up slack in the economy left by weakening exports.
"China will strive to boost domestic demand, change its economic growth model and maintain stable and fast economic growth, which in itself is a huge contribution to the stable financial and economic development of the world," Wang said.
Paulson said the two days of talks would focus on the building blocks for an enduring bilateral economic partnership.
For the first time, he said, the dialogue would focus on how the two governments can work together through international forums to strengthen the global economic system.
He said he expected to reach substantive agreements in five areas: electricity generation, transportation, clean water, clean air, and protecting wetlands and other natural areas. (Additional reporting by Eadie Chen and Langi Chiang; Editing by Alan Wheatley)