http://online.wsj.com/public/article/SB115715198422952315-HpVDxmnSNFy4fA5drew_EbmFYtE_20060908.html?mod=regionallinks
After nearly two months on the job, Treasury
Secretary Henry Paulson is set to make his first official trip overseas this
coming week when he heads to Vietnam to huddle with other finance ministers at
the Asia-Pacific Economic Cooperation forum.
The trip to Hanoi will be closely watched -- both here and abroad -- for what
Mr. Paulson has to say about China and the role it plays in global trade
imbalances. Asian leaders, and financial markets around the world, are looking
for clues to whether Mr. Paulson's approach to China will be different and,
perhaps, more successful, than predecessor John Snow's. Mr. Snow sought to apply
quiet diplomatic pressure on China rather than lecture the Chinese, and the
Chinese did make a high-profile move to a more flexible currency on his watch.
Mr. Paulson, a former Goldman Sachs chief executive, has had extensive
dealings with the Chinese, and is sure to fine-tune the Bush administration's
approach. Indeed, with domestic economic policy on hold until after November's
elections, Mr. Paulson is likely to make dealing with China one of his top
priorities.
To date, Mr. Paulson has continued to assert the administration's position
that China should work to strengthen its currency. While that position won't
change, Mr. Paulson is likely to start advocating a more holistic approach to
dealing with China -- focusing more on the country's macroeconomic picture and
less on individual issues, such as exchange rates or intellectual-property
rights.
The U.S. has a widening trade deficit with China, which has caused political
angst among both Democrats and Republicans eager to find someone to blame for
American workers' worries in an election year. But Mr. Paulson, who became the
chief bond salesman for the U.S. government when he took the Treasury post, is
aware that China has become one of the biggest holders of U.S. debt.
Although Mr. Paulson will see China's finance minister in Hanoi, he isn't
expected to say much publicly about China while at the APEC meetings. He'll save
that for later in the month when he visits China and attends the annual meetings
of the International Monetary Fund and World Bank in Singapore.
APEC isn't "a signature venue for dealing with global finance issues," says
former Clinton economic adviser Daniel Rosen, now a consultant with China
Strategic Advisory, "but it has a lot of value as an informal caucusing among
fellow finance officials from the region," which is increasingly important to
the U.S. -- and the global -- economy.
