Geithner praised China's "ambitious plans" to move its economy away from an export-led growth model, which has produced a huge trade surplus with the US, and spur consumer demand.

A rebalancing of the Asian giant's economy would help reverse the worst global downturn in decades, the Treasury chief said at the start of the two-day US-China Strategic and Economic Dialogue meeting.

The high-level meeting between the world's largest developed and developing economies is the first under President Barack Obama's six-month-old administration.

"China's success in shifting the structure of the economy towards domestic demand-led growth, including a greater role for spending by consumers, will be a huge contribution to more rapid, balanced, and sustained global growth," Geithner said.

"Measures to raise household incomes and strengthen the social safety net will be instrumental in this effort, as will the continuation of China's program of financial sector development and reform," he said before heading into closed-doors discussions.

Geithner, who is co-chairing the economic track of the talks with Chinese Vice Premier Wang Qishan, said that a rebalanced Chinese economy would also make headway toward "our shared environmental goals" by putting China on a "less carbon intensive and more energy efficient path."

US Secretary of State Hillary Clinton and Chinese State Councilor Dai Bingguo are co-chairing the policy track of the dialogue, meant to be held annually alternating between Washington and Beijing.

Geithner said the joint response of the US and China to the global economic crisis marked "a turning point" in their cooperation.

US and Chinese actions so far had made "a very substantial contribution" to governments' success "in blunting the force of this economic recession and beginning to restore confidence," he said.

Wang, China's key economic policymaker, said there were signs of an economic recovery and that US financial markets were stabilizing.

The United States and China "are joining hands" to overcome the downturn, he said in a translated opening speech.

"I'm confident this crisis will finally be over."

Geithner recalled that both superpowers had pledged to continue to shore up their economies until they are well on the road to recovery.

"Both our countries have made it clear our commitments to maintain strong policy in support of economic demand until recovery is firmly in place," he said.

"At this moment of crisis, we acted together."

Wang underscored the benefit of close US-China cooperation for the global economy.

"A more open and dynamic Chinese economy will bring opportunities to all countries in the world, including the United States."

David Loevinger, who coordinates China policy at the Treasury Department, said that the Chinese agreed with US assessments of their economy in the closed-door talks.

"We think Chinese growth is good for the US, it's good for US companies, it's good for US workers, but if China is going to grow, it's not going to be able to grow by exporting to the US," Loevinger told reporters on a conference call.

"When we went speaker by speaker on the Chinese side, I don't think anybody disagreed with that assessment," he said.

China, which has the world's largest foreign exchange reserves, topping more than two trillion dollars, plans to step up its investments to counter the global crisis, a senior Chinese finance ministry official said.

"We will bring the role of public investment into further play," Zhu Guangyao, assistant finance minister, said at a news conference.

Virtually absent from the discussions was longstanding friction over China's currency. The global crisis appeared to eclipse Washington's concerns that Beijing keeps the renminbi undervalued to gain a trade advantage.

The US trade deficit with China swelled to a record 681.1 billion dollars in 2008 but the gap has been shrinking amid plunging trade volumes.

Zhang Xiaoqiang, vice chairman of China's National Development and Reform Commission, told reporters at the end of the first day of talks that the US side had not pressed the issue.

In response to a question about the tenor of the talks, Zhang said: "No side is demanding too much."

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