From The Sunday Times:
MISSION IMPOSSIBLE. That’s the best way to describe Hank Paulson‘s just-concluded trip to Beijing, ostensibly to persuade the Chinese to do something to whittle down their huge trade surplus with the United States.
The secretary of the Treasury and his colleagues ” the delegation included the commerce, labour, health and human resources, and energy secretaries in addition to the US trade representative, the administrator of the Environmental Protection Agency, and the chairman of the Federal Reserve Board ” don’t have much of substance to show for their 13,000-mile round trip. Indeed, if their aim was to pursue the oft-stated (with tongue-in-cheek) goal of American policy, a ” strong dollar”, the delegation that The Wall Street Journal derided as “the biggest economic expedition since Marco Polo’s” should have been diverted to Riyadh.
While the Chinese have been accumulating dollars at the rate of about $200m a year, high oil prices have driven the oil exporters’ trade surplus with America to $500m a year. These oil producers, members or fellow travellers of the Opec cartel that is keeping prices above competitive levels, are feeling put upon because the dollars they are getting for their oil now buy fewer pounds to spend in Harrods, and fewer euros to spend on the necessities of life in the south of France. [Full Text]
(Photo of Wu Yi and Hank Paulson)
