BEIJING (Bloomberg) — Chinese officials urged the US to do everything possible to restore calm to financial markets and said they are preparing for a "worst-case scenario" as the global crisis deepens.

The comments in Beijing yesterday by Vice Premier Wang Qishan and central bank Governor Zhou Xiaochuan came as US Treasury Secretary Henry Paulson praised China's "responsible role" in combating the crisis.

The global financial turmoil is dominating the fifth Strategic Economic Dialogue, a biannual summit initiated by Paulson, diverting attention from US claims that China's currency is undervalued. Both sides called for continued cooperation as Paulson prepares to make way for the administration of President-elect Barack Obama, who has already branded China a currency manipulator.

"Their growing interdependence means both sides see more reasons to talk in a less emotional manner," said Willy Wo-Lap Lam, an adjunct professor of history at the Chinese University of Hong Kong. "The US has a good realisation that the Chinese economy is in real trouble."

Paulson didn't refer to the yuan in his opening remarks. A US official later said China remained committed to the appreciation of its currency over the medium to long term. The official couldn't be identified under the rules of the briefing.

Wang said he was pushing for the dialogue to continue. Paulson said the talks had helped in managing complex issues, such as the global turmoil, and he was committed to "a strong finish".

Zhou told US officials that, while China remained confident of maintaining growth in the world's fourth-biggest economy, it needed to prepare for the worst, central bank official Jin Qi said. "We hope that the US can take all necessary measures to stabilise its financial markets and economy as soon as possible and ensure the safety of China's assets and investments in the US," Wang said. "To work together to tackle the financial crisis is the most pressing task that we are facing."

Zhou urged the US to increase savings, after excessive consumption and debt helped to trigger the crisis.

The two sides highlighted areas of agreement at the talks. The discussions will yield "substantive agreements" on electricity generation, transportation, and environmental cooperation, Paulson said. China is seeking more energy-efficient technology.

Wang said there had been "positive progress" on an accord to facilitate investment by Chinese and US companies in each other's assets.

The talks' effectiveness is limited because Obama is taking office in less than two months, said Sun Zhe, a Beijing academic who advises the Chinese government. Obama's transition team is not taking part, US Agricultural Secretary Ed Schafer said yesterday.

The US is China's second-largest export market after Europe. China, with the world's largest currency reserves — poised to top $2 trillion — surpassed Japan in September to become the biggest foreign holder of US Treasuries.

Its role as a buyer of US debt may only become more important as the US spends to revive its economy and thaw credit markets.

A 0.7 percent drop by the yuan against the dollar on December 1 triggered speculation that China had switched to favouring a depreciating currency, which would help exporters by pulling down prices in overseas markets.

The plunge may instead have been a message to Obama, who has called China a currency manipulator and "is taking a much harder line on trade issues", said Frank Gong, head of China research at JPMorgan Chase & Co. in Hong Kong.

China wants to highlight both the urgency of the nation's own economic problems and the importance of continuing the Strategic Economic Dialogue, the economist said.

"We believe China likes the SED platform very much," said Gong. "However, US President-elect Obama has so far never indicated that he would want to continue the dialogue."

The yuan closed at 6.8817 against the US dollar, close to five-month low.