NYT: Treasury Secretary readies 'new plan to confront China's growing economic clout'

RAW STORY
Published: Wednesday August 9, 2006

"Treasury Secretary Henry M. Paulson Jr. has spent his first weeks in office seeking to assert control within the administration over international economic issues, focusing in particular on developing a new plan to confront China's growing economic clout, administration officials say," the New York Times will report on Thursday.

"Hoping to put his stamp on one of the most pressing issues he faces, Mr. Paulson plans a new drive to press Beijing to open its financial systems, stimulate consumer demand and let the value of its currency rise to reduce exports," Steven R. Weisman writes for the Times.

"Paulson has an interest in trying to pull together the administration’s economic policies on China," an unidentified adviser to the Treasury secretary tells the Times. "On the currency issue, the stars may be aligned for some movement by the Chinese, but the Chinese are also going to be very careful."

In June, the Washington Post reported before Paulson's confirmation by the Senate that the former Goldman Sachs chairman had had extensive dealings with China.

"As chairman and chief executive of Goldman Sachs Group Inc., Paulson has aggressively led the firm's foray into the Chinese market, where it has become a dominant player in selling the securities of China's biggest companies to investors abroad," wrote Paul Blustein for the Post. "He takes pride in having visited China more than 70 times since 1992 and has cultivated relationships with Chinese officials at the highest levels."

Paulson is expected to soon decide whether or not Beijing should be labelled as a "currency manipulator."

"To supporters of warm relations between Washington and Beijing, a Paulson-led Treasury bears the promise of a heightened level of sophistication in dealing with thorny transpacific problems, especially China's policy concerning its currency, the yuan," Blustein wrote for the Post in June.

"Paulson, who took office last month, will have his first opportunity for face-to-face meetings with Chinese officials this fall," reported the Associated Press earlier today. "Treasury officials announced Wednesday that Paulson will attend meetings of finance ministers at the Asia-Pacific Economic Cooperation forum in Vietnam on Sept. 7-8."

Excerpts from Thursday's Times article:

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The Treasury chief is also under pressure from Congressional leaders to achieve a quick success on China in the economic sphere at a time when the United States has had trouble securing Chinese cooperation on its military buildup and on political issues relating to Iran, North Korea and Sudan.

Three months before the elections this fall, the trade and economic issues are considered especially sensitive for the administration. The United States’ overall current-account deficit of $800 billion last year is widely viewed on Capitol Hill as a threat to American solvency and jobs.

Fears in Congress are focused specifically on the risk that China might suddenly seek to reduce its holding of more than $300 billion in United States government debt, or 8 percent of the total that is publicly held. Congressional leaders also accuse China of laxity on fighting the counterfeiting of intellectual property.

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FULL TIMES ARTICLE CAN BE READ AT THIS LINK