A couple of notes ahead of the U.S.-China chinwag later this week that goes under the rubric of the two countries’ biannual Strategic Economic Dialogue.
The first is that this looks likely to be the last of these meetings for Vice Premier Wu Yi. China’s most powerful woman is due to retire shortly. At 68 she was not reelected to the Central Committee in October. Stepping down from government posts follows as night follows day.
Wu was a proponent of the policy of depoliticizing economic disputes and had been in charge of both the contentious trade talks with the U.S. and with cleaning up the product-safety scandals. She also struck a good working relationship with her U.S. counterpart in these meetings, U.S. Treasury Secretary Hank Paulson.
Paulson, too, could be gone within the year following the 2008 presidential elections in the U.S. Which brings me to the second note: China may be waiting for a change of administration in Washington before doing anything serious about revaluing the yuan, a topic that again is likely to be high on the agenda at this week’s talks.
Nicholas Lardy of Peterson Institute for International Economics raises the point that the Chinese expect the next U.S president to be a Democrat. With the Democrats already controlling a Congress unfriendly to Beijing, Washington is likely to become more hostile to China after the election. So the plan would be to hold back from making an more reforms — or concessions depending on your point of view — and to keep them in Beijing’s back pocket until the tenor of the new regime in Washington is clear.