China and the United States need to collaborate to expedite reforms and combat slowing growth in the world's second-largest economy, former Treasury Secretary Hank Paulson said Tuesday.
"They have an economic model that has run out of steam. They need to place much more reliance on domestic-led growth, domestic consumption," he told CNBC from Seattle, where Chinese President Xi Jinping will meet with American business leaders Tuesday.
The Chinese government has recently received criticism for its handling of a sluggish economy and erratic stock markets, including moves to ease monetary policy and devalue its currency. Paulson contended that cooperation and investment between China and the U.S. will not only help to kick-start economic activity but also address growing concerns like cyberattacks launched from Chinese soil.
"The most troublesome economic issue is corporate and commercial cybertheft. I think it's the biggest risk when you look at U.S.-China relations. Ultimately, it's very important for our two countries to come together," Paulson said.