* U.S., China launch negotiations on investment treaty

* U.S., China sign 10-year energy, environment framework

* Chinese delegation to visit U.S. Congress on Thursday (Adds reaction, details, background, dinner speech by Wang)

By Doug Palmer and Jason Subler

WASHINGTON, June 18 (Reuters) - The United States and China agreed on Wednesday to initiate negotiations on a bilateral investment treaty that would make it easier to invest in one another's corporations and to cooperate more on energy issues.

The initiatives were announced by U.S. Treasury Secretary Henry Paulson after two days of talks with a Chinese delegation led by Vice Premier Wang Qishan, who said China was committed to free trade but was studying the causes of global financial turmoil that stemmed from a U.S. subprime mortgage meltdown.

A treaty would take at least a year to negotiate -- well past the Bush administration's tenure that ends in January -- and Democrats made clear that they had reservations about it.

"If the administration moves forward with these negotiations, it should make clear to China that all major decisions in the negotiations will necessarily be left to the next president," the chairman of the U.S. House of Representatives Ways and Means Committee, Charles Rangel, and Trade Subcommittee Chairman Sander Levin wrote in a letter to Paulson.

A treaty would also require a two-thirds majority vote of approval by the U.S. Senate, a potential hurdle if Democrats remain in a majority.

U.S. COMPANIES HAPPY

U.S. business interests were more supportive. The president of the Financial Services Forum, Rob Nichols, said a treaty would "improve U.S. access to China's market and provide greater security for U.S. investments" in its growing economy.

China also has a strong interest in a treaty, in part because of difficulties its companies have had in securing licenses to do business in the United States.

In particular, the screening process set out by regulations designed to protect U.S. security interests under the Committee on Foreign Investment in the United States, or CFIUS, have ensnared some Chinese firms in long waits for licenses.

Paulson said the energy agreement would engage businesses, academics and leading research facilities in both countries in sharing knowledge and helping bring to commercial use alternative energy and environmental technologies.

The agreements stemmed from talks under a so-called "strategic economic dialogue" begun two years ago with China. Paulson wants the next U.S. administration to continue the dialogue, and Chinese officials said they hoped it would continue. The next meeting, the last for the Bush administration, is scheduled for December in Beijing.

China committed itself to further open its financial services markets by letting foreign companies that meet its qualifications to list their stocks on Chinese stock markets and to permit foreign banks to issue bonds denominated in China's yuan currency, also called the renminbi.

This time around, U.S. calls for China's yuan to appreciate in value more rapidly were muted, perhaps because it has gone up some 20 percent against the dollar in the past two years.

In addition, China adroitly raised its concern over the plunging dollar's value, saying it was pushing commodity prices up and the Bush administration should take a "responsible" attitude toward the dollar's exchange rate.

"That's in the interest of the United States and is necessary for the stability of the global system of foreign exchange," China's Assistant Finance Minister Zhu Guangyao said in a neat turn of the tables on U.S. authorities who have in the past said China's cheap yuan was fueling imbalances.

Paulson said at a press conference the United States welcomed the increased pace of appreciation in China's yuan currency <CNYNDF=> -- much sought by U.S. manufacturers -- and wanted more of it. He made light of questions whether China had complained about the weakening dollar's impact on oil and other commodity prices.

EVERYBODY COMPLAINS

"I don't see why Chinese officials can't say something about the U.S. dollar weakness. Everyone else seems to say it around the world," Paulson said, adding that he still considered U.S. economic fundamentals to be strong.

Over the course of talks that began at the U.S. Naval Academy in nearby Annapolis, Maryland, on Tuesday and finished at a dinner for Wang sponsored by U.S. business groups, the Bush administration made every effort to play best host.

Wang said at the dinner that China intends to keep opening its economy to more foreign participation, but investors need to be patient with pace of reform.

The Chinese delegation met with President George W. Bush at the White House on Wednesday where, according to Chinese officials, Bush said that he will attend opening ceremonies for the Beijing Olympics in August.

Zhu quoted Bush saying he "looked forward to attending the Olympic opening ceremony," something that U.S. Democratic politicians have urged him not to do. The White House refused to confirm it.

"We have not announced the details of the president's schedule yet," a White House spokesman said.

Wang and the rest of the Chinese delegation were scheduled to visit Capitol Hill on Thursday to meet members of the Senate Finance Committee before heading to New York where he will again address a blue-ribbon group of politicians and Wall Street officials. (Additional reporting by David Lawder, Glenn Somerville and Alister Bull; writing by Glenn Somerville, editing by Neil Stempleman)

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