NEW YORK (AFP) -- U.S. Treasury Secretary Henry Paulson reiterated his support for a strong dollar Thursday, in a speech that also called on China to show more exchange-rate flexibility and speed up its economic reforms.

Paulson repeated his position that markets should set the dollar's value and urged China's government to allow the yuan to appreciate, saying it would help Beijing keep inflation in check while maintaining stable growth.
""A strong dollar is in our nation's interest and again the currency value should be determined competitively based upon our economic fundamentals,"" Paulson told Chinese and U.S. business leaders gathered in New York.
He said that while the U.S. economy was experiencing a crunch in the credit and housing markets, the underlying health of the US economy would carry the United States through the current rocky phase.
""I've been pretty clear in acknowledging that we're going through some turbulence in our capital markets. Risk is being reassessed, it's being re-priced and it's going to take just a while to work through that.
""But we're working through it against a healthy economy, a very strong global economy and a very healthy US economy. I believe we are going to continue to grow, to work our way through that because of the strength of our economy,"" he said.
He was speaking after the dollar slipped slightly in New York following comments by Federal Reserve chairman Ben Bernanke painting a bleak picture of the U.S. economy, caught between dual threats of mounting inflation and slower growth.
In a speech that focused mostly on the pace of Chinese reforms, Paulson said that while some in Beijing feared moving too quickly, ""I believe moving too slowly is a bigger risk for Chinese and world prosperity.""
""China needs more flexible prices including a much more flexible market-driven exchange rate,"" he told the China Institute Executive Summit.
""Exchange rate flexibility is also key to allowing monetary policy -- the most potent instrument for guiding an economy -- to focus on assuring stable and non-inflationary growth.""
Paulson, who has visited China several times during his tenure as treasury secretary, said that China needed to do much more to better integrate with the rest of the global economy.
""Further openness to trade and competition is clearly in China's interest.""
""The renminbi (yuan) exchange rate is increasingly being viewed by many countries as a source of unfair competition. China is increasingly seen as out of step with international norms and expectations,"" he said.
China in 2005 ended the fixed peg of the yuan to the dollar by allowing it to float within a relatively narrow range. But many leaders in the United States and Europe have urged China to move faster.
U.S. lawmakers claim Beijing artificially depresses the yuan to boost Chinese exports, exacerbating the gaping U.S. trade deficit with China.
Wu Xiaoling, the deputy governor of China's central bank, last month acknowledged China's large trade surplus was becoming a burden to Beijing, but said a revaluation of the yuan alone was not the remedy to rebalancing trade.
Paulson also addressed the issue of the safety of exports, amid a wide-scale U.S. recall of Chinese toys believed to contain toxic chemicals.
""The benefits of trade can only continue to flow when consumers around the world have confidence in the quality and integrity of the goods they buy,"" he said.
""While the safety of food and product imports is a global problem, it has touched our bilateral trade relationship in an acute way in recent months.""