S&ED, A Distorted Game
Economic Observer May 22, 2010
On May 24th, Gary Locke, the American Secretary of Commerce, after a week-long journey in China, will join Secretary of State Clinton and Treasury Secretary Geithner in Beijing. For the next 2 days and a half, they will lead a 200-strong task force for the Strategic &Economic Dialogue (S&ED) with China. Across the negotiating table will sit State Councilor Dai Bingguo and Deputy Premier Wang Qishan.
But according to Mr. Joseph B. Fuller, CEO of Monitor Group, it is a long shot for America to lift restrictions on sensitive exports to China, such as military and computer technologies. "Export of hi-tech products is highly politicized in USA. With the mid-term election round the corner, the Obama Administration will play it safe. The only potential breakthrough would be clean energy technology."
The European sovereign bond crisis now ranks top concern for America's financial community, which, as Mr. Fuller suggests, helps relieve the tension over the value of RMB.
Mr. Fuller says, "The top priority for President Obama is to ensure confidence. And the Chinese government seeks an enabling environment for growth and job safety. So long as people remain preoccupied by a weak Euro and its consequential turmoil, neither would bother to stir panics."
"The governments are like the parents of the market. They tell the kid 'Don't worry. Dad and Mom are cool.' Well, the quarrel is only postponed."