One of the most high-profile U.S. government delegations visited Beijing this past week, headed by Treasury Secretary Henri Paulson and including Federal Reserve Chairman Ben Bernanke. In all, eight American ministry level officials. Their demand: revalue the yuan!
“Oh no, we won't”, the Americans heard the Chinese say, down from President Hu Jintao to Supreme Negotiator Madame Wu Yi and further down the ranks. The U.S. should know by now that pressuring the Chinese won't work. Sure, Beijing will let the market play a bigger role in determining the exchange rate of the currency. It will promote consumerism and better protect intellectual property rights. And the U.S. government promised to advise its people to save more money.
All promises which are rather difficult to fulfill by Christmas. The high-powered 'strategic economic dialogue' ended without tangible results.
And still, for both parties, Chinese and Americans, it was a win-win situation. Paulson can tell Congress that the Chinese listened to the American point-of-view. Th Chinese can tell their people they didn't give in to American pressure. And they can continue talking next year in June in Washington.
Better to talk than to make war. Let the markets sort out the economic problems.
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