Bush reiterates belief in ''strong dollar policy''

WASHINGTON, Oct 12 (Reuters) President George W Bush said in an interview with the Wall Street Journal that he believes in a ''strong dollar policy'' and that a trade war with China is not in the US interest.

In the interview posted on the Journal's Web site last night, Bush said Treasury Secretary Henry Paulson ''reflects the view of this administration that the strong dollar policy is the correct policy.'' Bush also said, ''We also believe that the best way for a currency to become valued is through the market.'' He declined to say whether he thought the low dollar is helping trade deficit numbers improve.

On China trade, Bush said Paulson was having a ''strategic dialogue, a strategic economic dialogue with China.'' ''It's in our interest that we have access to the Chinese market,'' Bush said, adding, ''And to me that's the best way to approach the issue, rather than shut down markets or protectionist policies or a law that will create a trade war. It's not in the world's interests, nor in the interests of the United States, that we have trade wars.'' Paulson told Reuters earlier yesterday as he left a meeting with Bush: ''A strong dollar is in our nation's interest and the currency values should be set in a competitive marketplace based upon underlying economic fundamentals.'' The comment came ahead of an October 19 meeting of finance ministers and central bankers of the Group of Seven major industrial nations, where currencies will be a priority topic.

REUTERS NY RAI0953