US Treasury's Paulson plans Asia trip in March

WASHINGTON, Feb 21 (Reuters) US Treasury Secretary Henry Paulson will visit Japan, South Korea and China March 5-8, meeting Japanese Finance Minister Koji Omi and Bank of Japan Governor Toshihiko Fukui among other top officials, a Treasury spokeswoman said today.

Paulson will travel to Seoul on March 6 and stop in Beijing on March 7 to meet with officials before going on to Shanghai to make a speech on March 8 that will focus on China's capital markets, the spokeswoman, Brookly McLaughlin, said.

The Treasury is working to arrange meetings with financial counterparts in China and South Korea.

Paulson has repeatedly said in recent weeks he believes the Japanese yen is a freely traded currency whose value is set in open markets but which remains weak because of low interest rates in a country shaking off years of deflation.

This disappointed European economic officials who had hoped to use this month's G7 meeting in Essen, Germany, as a platform to engineer a rise in the yen against the euro.

But Paulson has focused much more attention on China's closely controlled yuan currency, urging Beijing to move more quickly to a flexible exchange rate. He also has called for an increased opening of China's markets and financial services sector to foreign ownership.

Last week, he appointed former Reagan administration trade official Alan Holmer as his special envoy to build up the ''strategic economic dialogue'' with China to consider how to move ahead on reforms and defuse sensitive trade issues.

McLaughlin said Paulson continues to have discussions with US lawmakers regarding possible reforms to Social Security and other US entitlement programs, as well as tax proposals in US President George W Bush's fiscal 2007 budget plan.

REUTERS AB RN2246