Paulson Gets Promise Only Of Dialogue With China
Thursday, September 21, 2006
BEIJING, Sept. 20 -- The United States and China on Wednesday announced plans for a string of high-level talks on tense economic issues -- among them, the value of China's currency, its enormous trade surplus and the routine theft of intellectual property.
During a joint announcement laden with ceremony at the Great Hall of the People, Treasury Secretary Henry M. Paulson Jr., who is to lead the dialogue from the American side, portrayed the talks as an unprecedented cooperative effort. He said it would engage the presidents of both countries and other members of the U.S. Cabinet. The Chinese side is to be headed by Vice Premier Wu Yi, who stood opposite Paulson and whose portfolio includes economic and trade policy issues.
"This is a unique opportunity to create an initiative that reflects the 21st-century global economy and redefines the economic relationship between the United States and China," Paulson said.
But with senior administration officials touting the announcement as the highlight of Paulson's visit to China, it became evident Wednesday that he will leave here with nothing concrete on the central trade dispute: American demands for a significant increase in the value of China's currency, the yuan. Many U.S. manufacturers say the currency, whose value China tightly controls, is priced so low as to make Chinese goods unfairly cheap on world markets.
Some analysts construed the new "U.S.-China Strategic Economic Dialogue" as a consolation prize for the Treasury secretary. Given that Paulson faces considerable pressure for action in Washington -- a Senate bill threatens punitive tariffs on all Chinese exports to the United States without a significant appreciation in the yuan -- China's leaders did not want to send him home empty-handed.
"It is something of a show," said Zuo Dapei, an economist at the Chinese Academy of Social Sciences, an institute connected to China's State Council. "But it also demonstrates that the United States and China have an improved economic relationship and neither of them will take sudden action that will threaten the other side."
In comments over the past few days, Paulson has tamped down expectations for significant movement on the currency issue. He has advanced a new notion of the U.S.-China trade relationship, emphasizing that American prosperity is linked to China's rise.
But the political pitfalls of this approach have emerged, with some manufacturing groups in the United States expressing disappointment with what they see as Paulson's soft line. Further talk of cooperation with nothing to show for it besides dialogue could subject the Treasury secretary to stern questioning when he returns home this weekend.
Paulson said it would be wrong to see the talks as a substitute for action. Rather, they created a venue in which U.S. pressure for movement will be more likely to gain results, he said.
"I'm not going to go taking victory laps over a process," Paulson told reporters. "What this does is give us access to a broad group of senior people and to the leaders at the very top."
On the U.S. side, the dialogue is to include several federal departments, including Commerce, State, the U.S. trade representative, Health and Human Services and the Environmental Protection Agency. Chinese counterparts will participate, including Foreign Minister Li Zhaoxing and Finance Minister Jin Renqing, according to the announcement.
Paulson specifically rejected the notion that he needs to gain support in Congress for the idea.