June 28 (Bloomberg) -- Henry Paulson, confirmed today by the U.S. Senate to become Treasury Secretary, said faster global economic growth will help reduce lopsided global trade and investment flows.

``I look forward to working with other major economies to implement policies that will lead to faster, more balanced growth abroad, which will help address these imbalances,'' he said in a written response to questions posed by the Senate Finance Committee, released today in Washington.

Paulson, outgoing chief executive officer of Goldman Sachs Group Inc., was responding to Max Baucus, Democrat from Montana, who asked if it's time for an agreement like the Plaza Accord of 1985 to reduce the U.S. current account deficit. Named for the New York hotel where the deal was struck, finance ministers from the world's largest economies agreed then to weaken the dollar.

Paulson, 60, didn't mention the U.S. currency in his response, adhering to departing Treasury Secretary John Snow's practice of avoiding making a link between the dollar and the trade deficit. Snow resigned on May 30, the day President George W. Bush nominated Paulson as his third Treasury chief.

``He didn't throw a spanner in the works,'' said Scott Ainsbury, who helps manage about $12 billion in currencies at FX Concepts Inc. in New York. ``He pretty much toed the line.''

Sailing Through

Paulson sailed to confirmation after playing it safe on issues from China's currency to taxes and deficits. He avoided roiling financial markets in responses during a Senate Finance Committee hearing yesterday and in written answers to questions.

Paulson appeared before the committee yesterday, where he faced almost three hours of mostly friendly questioning. He was told by both Democrats and Republicans that his confirmation was assured.

Paulson called the so-called imbalances, reflected in last year's record current-account shortfall, a ``long-term'' issue. Paulson said China, a country he's visited more than 70 times, must play a part by boosting its domestic economy and making its currency more flexible.

He told the committee yesterday that tax increases to help close the budget deficit would be a ``big mistake,'' and Bush's temporary reductions should be made permanent. He acknowledged cuts don't typically pay for themselves, while praising the role they played in lifting the U.S. economy out of recession early in the decade.

``I can remember very clearly what it was like running a Wall Street firm in 2001'' after terrorist attacks and amid a shrinking economy, Paulson said during his hearing. ``I watched the tax cuts add to consumer confidence, business confidence.''

China Continuity

In language almost identical to Snow's, Paulson reiterated today that his goal is for China to have a currency determined by market forces. Snow advocated ``quiet diplomacy'' with China, resulting in a 2.1 percent revaluation of the yuan last July. The yuan has strengthened about 1.3 percent since the shift.

The pace of change is angering members of Congress, who blame China for the record $726 billion U.S. trade deficit last year. Snow said in an interview on the day of his resignation that his successor's biggest challenge will be fending off the growing protectionist sentiment on Capitol Hill.

The current account deficit, the broadest measure of international trade, swelled to $791.5 billion last year. Paulson said in his response to Baucus that global imbalances require a global strategy.

That's already happening. The Group of Seven major industrial nations called in April for stronger Asian currencies. Prior to the meeting in Washington, the group simply urged more flexible exchange rates.

To contact the reporters on this story: Kevin Carmichael in Washington at kcarmichael@bloomberg.net; Alison Fitzgerald in Washington at Afitzgerald2@bloomberg.net

Last Updated: June 28, 2006 16:40 EDT