Word: paulson
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...Paulson was suffering, though, you wouldn't have known it-even though he was the U.S. official who least needed the lecture. He remained attentive throughout. After all, Paulson made countless trips to Beijing during his investment-banking career at Goldman Sachs and had doubtless sat through many similar monologues. "He's been in a lot of meetings with a lot of Chinese officials, and knows that the last thing you do is get angry at the effective ones," says one former U.S. diplomat. Wu spearheaded China's effort to join the World Trade Organization five years...
...Hank Paulson is trying to rectify that. Since he took over at the Treasury six months ago, the former Goldman Sachs CEO has made China the centerpiece of what will be his two-year run as the Administration's top economic policymaker. The December meeting in Beijing was the first of a series of biannual economic summits that are supposed to increase communication, with a specific focus on intermediate and longer-range economic issues. China's leaders "want to know that this relationship is being managed," explains Paulson during an interview in his ornate office at the Treasury Department...
...Paulson thus views his job as something like cajoler-in-chief. He says he has sympathy for Beijing's argument that it must move cautiously. But he also wants the Chinese to pick up the pace, because it's in their own interest to do so. Unless they continue to push reform throughout the economy-especially in a financial sector dominated by bloated state-owned banks that lend lavishly to uncompetitive state enterprises-the cost of dealing with the problem later will balloon. (And the argument is fair enough: it's a lesson the Japanese learned in the 1990s when...
...Besides, Paulson says, the world may run out of patience if Beijing doesn't get a grip on currency and trade issues. The threat of protectionism in the U.S. is very real, he warns: "It's one of the major risks we face. If China were a relatively small economy that was in a period of transition, it would be very easy for the rest of the world to say, 'take your time.' But ... they're already a global economic leader, so they aren't going to get as much time as they might like." China...
...Will China take Paulson's message to heart? The yuan has risen slightly since last month's summit in Beijing, but it's still not clear that Hu and his fellow leaders have any real sense of urgency on trade and currency issues. Lardy, the Institute for International Economics fellow, is skeptical that there will be any significant policy changes soon. He calls China's leaders "momentum players," observing that they are loath to change course while things are going well. After all, China has double-digit economic growth, huge trade surpluses, and more than a trillion dollars in foreign...