A Fragile Friendship

The Wu Yi/Hank Paulson photo-op a.k.a. the Strategic Economic Dialogue, has come to an end.

Obviously, the purpose of a two-day meeting is not to negotiate—even if one counts Secretary Paulson jawboning Mdme. Wu over dinner about the merits of opening up China’s financial markets to his eager buddies on Wall Street.

The meeting is political theater—meant to announce agreements and concessions previously negotiated.

And for whatever reason, we came up with a whole lotta nuthin’.

The Great White Whale of PRC-US economic relations—RMB revaluation—escaped our Ahabs once again, leading to appropriately dismissive coverage of the meager catch our negotiators hauled in.

Considering I read somewhere that China seriously considered cancelling the summit as an expression of displeasure at the US CVD and WTO complaints that sprouted like weeds earlier this year, expectations should not have been too high.

However, Henry Paulson is the great white hope of the Bush administration as far as a sophisticated, adroit, and effective China policy is concerned, so it was disappointing that so little came of the meeting.

Steve Clemons’ The Washington Note reprinted a column from the Nelson Report alluding to the apparent frostiness of the meeting, and blaming Paulson for a gaffe:

...witnesses agree that something definitely was "missing" today. Commented one, privately, "it was as cold as ice in there. The Chinese just looked like they wanted to get off the stage quickly. They really didn't bother to put on a show for the cameras back home."
...

One normally hesitates to ascribe too much to the theater of body language, but here's something that just bashes you right between the eyes: Paulson, the guy with 72 private trips to China, all that hands-on experience, he who told the White House, State and USTR not to worry, that he would be the China Guy in this Administration...at the closing press conference, Paulson stalked in, well ahead of Wu Yi, and then started reading his statement before she even reached the podium.

Excuse me? An American or European would have cold-cocked the President for such calculated rudeness! In China (Japan, Korea, etc.) you watch older married couples walk into someplace. . .the husband is 10 feet in front, and the subservient wife is dutifully plodding behind. You think for one minute that elderly maiden lady Wu Yi didn't catch the insult here?


It seems that Mr. Paulson might have been disappointed that his friendly efforts on behalf of China over the years had yielded him little more than a middle finger salute at the SED, and he used the setting of the closing statement to convey his unhappiness.

But he shouldn’t be surprised.

He should be chastened.

In my experience with Chinese bureaucrats, they respect power and admire those who can combine friendship and power.

But to attempt to extract through friendship concessions that should only be demanded from a position of power is a blunder, even an insult.

Right now, with a Democrat-controlled Congress considering 27 different pieces of anti-China legislation and President Bush scraping along in the polls at under 30%, Henry Paulson doesn’t have much of a negotiating position.

The Chinese, for all their Pollyannish wonder at the independence of our legislative branch, know full well that the unpopular, lame-duck Bush administration can deliver very little on China policy.

So if the Chinese were frosty, it was a calculated frostiness, designed to show that Secretary Paulson can’t use his weakness as a negotiating point and ask the Chinese to make substantial or face-saving concessions so he can save them from the big bad Democratic Congress.

I think China will be facing some hard decisions on its economic future—which may require serious engagement with a US government that can negotiate seriously and deliver on its promises--so they aren’t going to make concessions that only enable the continued, directionless flailing of an impotent administration on the wrong end of a dysfunctional relationship with Congress .

The Chinese attitude is probably, How about Paulson showing he’s still got some mojo by slapping around Chuck Schumer a bit before he asks us help him out.

And Mr. Paulson should reflect on the lesson that weakness makes it difficult—and dangerous—to presume upon a friendship.