Friday, December 15, 2006

Treasury Secretary Paulson's Remarks After China Visit Reveal Little, As Expected

The press release gives the usual cloudy rhetoric about the nature and details of the discussions, but we learn this:

year_bamboo_3
[Thanks to bestchinashop.com for the image.]

1. They talked about the trade imbalances and China's need to let their currency float more freely. The US tried to insist on this "in the clearest possible terms" arguing that more flexibility will "help China achieve more balanced economic growth, enhance the effectiveness of monetary policy, safeguard the health of the financial sector and promote over time an orderly reduction of external imbalances."

2. The Chinese responded that they are aware of their need for "open, competitive markets, including capital markets" that will enable them to float their currency more effectively; and they have agreed that the NYSE and the NASDAQ should open offices in China. That's an interesting detail I hadn't heard before.

3. They discussed China's violation of US and other international property rights, and China has promised to do what it can to enforce the existing international laws.

4. They discussed Doha (international trade) and energy issues. The statement makes reference to the Future Gen project, "an international effort aimed at developing clean, renewable energy supplies."

5. They have set up a "workplan" to measure the milestones of progress, focusing on the "opening of services, health care, energy and the environment, transparency, investment and aviation." (Aviation? Don't know just what that means.)

The next meeting is scheduled for May in Washington.

Sounds like status quo, but we will see if there are any changes in the speed with which the dollar/yuan exchange rate moves over the next few months. You'll find a good chart here.

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