Thursday, November 23, 2006

Ben Bernanke in China

New York Times reported that Treasury Secretary Paul Paulson Jr. has enlisted Fed Chairman Ben Bernanke to join him in yet another trip to China next month.

The main goal of the trip is again to push (or is the word threaten more appropriate?) China to do something about the massive trade imbalances between the two countries. Certainly the value of Yuan would once again be the focus of discussion.

What would stengthen Paul's hand in negotiating with the Chinese is not the presence of Fed Chief Bernanke though. It is the fact that the Democrats have staged a comeback in eletions just completed. Paul could leverage on the fact that he needs to bring home concrete results in order to stop the Congress, now in the hands of the Democrats rather than controlled by the Republicans, from passing protectionist laws that might have harmful effects to China's exports i a bid to get concessions from his Chinese counterparts.

Will the Chinese be so easily bluffed? Stay tuned, we would find out in a month.

And here is the NYT story.

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