In a keynote speech delivered at the groundbreaking session in Beijing, Wu said that while China's overall economy ranked fourth worldwide in 2005, its per capita gross domestic product was below the 100th spot worldwide.

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"Tapping China's underdeveloped productivity remains a long-term and arduous task," Wu said.

"Only by focusing on development over the long run can China lay the necessary material foundation for the constant improvement of the people's living standard."

The two-day dialogue is aimed at examining strategic issues in trade relations between the two countries.

The US delegation is headed by Treasury Secretary Henry Paulson and includes several other Cabinet secretaries and Ben Bernanke, chairman of the US Federal Reserve.

In her remarks, Wu pointed to the many challenges China's economic policy makers are facing.

Among them, up to 150 million Chinese are living in poverty, according to World Bank figures.

The proportion of rural labor to total employment is still much higher than the level in industrialized countries, and even in some developing ones.

State officials estimate that 300 million people will migrate from the rural areas to the cities within the coming two decades.

Over the next 10 years or so, the population will increase as much as 10 million a year.

"Confronted with such a huge challenge, it is imperative that China commit herself to accelerating economic development and gradually realize a smooth transformation from the urban-rural dual economic structure to a modern economic mix," Wu said.

Despite the challenges, the vice premier was optimistic about the future.

From 1979 to 2005, China's economy has grown at an annual average rate of 9.6 percent, and the momentum will be sustained for the next 15 years, Wu predicted.

"China will uphold the scientific concept of development featuring people-oriented, comprehensive, harmonious and sustainable development, and strike a proper balance between urban and rural development, development among different regions, economic and social development, development of man and nature, and domestic development and opening up to the outside world," Wu said.

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