Paulson in China

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He knows that threats don’t work in China, so what approach is US Treasury Secretary, Hank Paulson, likely to take when he leads a big delegation of US business and government VIPs to China next week?

According to the FT, he will be looking at issues including:

    • Developing a “strategic economic dialogue”
    • Currency “flexibility” (read, appreciation of the RMB…or at least help with the falling USD!)
    • Greater access to China’s financial services market
    • Increased freedom in M&A and trade

All good stuff, and no doubt people back home really do believe that the RMB is the source of all their woes (despite evidence to the contrary)…The BBC quotes the president of the National Association of Manufacturers (NAM), John Engler, as telling Paulson:

    “We need to see progress with China and we need to see it soon”.

Sadly this sort of message is unlikely to move the Chinese, who are masters at the slow game, and who are unlikely to throw down their hand in sympathy while they are themselves engaged in seriously re-evaluating the role of foreign investment.

The US will no doubt have to flex some economic and political muscle (or, even better, show a bit of political and economic leg) to make progress, and there is some hope that Paulson might be able to act in a suitably sensitive fashion. But it is certainly not going to be an easy job.

Expect the “dialogue” to continue. And those guys at NAM to be disappointed.

See news sources:

    Paulson reaching out to China
    Financial Times – London,England,UK
    … treasury secretary, will on Monday begin a series of discussions with industry leaders to hammer out the Bush administration’s policy towards China ahead of … (

    US firms call for Chinese reforms

2 Responses to “Paulson in China”

  1. China Hearsay: China law, business, and economics commentary Says:

    […] a more balanced and professional approach to this topic, you’ll have to get it from Jeremy Gordon at China Business Services. Jeremy’s conclusion that John Engler and NAM wil […]

  2. Archive » Another Month. Another Surplus| China Business Blog Says:

    […] surplus / deficit pain to come – and surely a nice ice-breaker for Secretary Paulson on his visit next week… Additional economic estimates for 2007 are reported here. See news so […]

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