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Threats Don’t Work for the US in China

U.S. Treasury Secretary Henry Paulson – fresh from his China trip, and with the new “China-U.S. Economic Dialogue” under his belt – has reportedly (via Bloomberg) told the stick-wielding senators [1](Schumer and Graham) to back off, and offers some good advice:

Thank you, Secretary Paulson!

It is suggested that the Senators will now take “a few days” to think about their negotiating strategy [2]. Thinking would certainly do no harm on this issue [3].

Meanwhile China has also been suggesting restraint. The FT quotes the foreign ministry as saying:

The FT adds that there is little chance of the bill going through in any case:

Hopefully all this will turn out to have been a storm in a very political tea cup. However it does highlight the fact that mixing US protectionism with Chinese nationalism has the potential to cause a big, very unwelcome bang for the economy and for trade.

29/9 Update: Hot off the press from the FT today – the stick has been put away:

I will watch the new initiative with interest, and suspect it will be a bit more subtle.

See news sources: