Treasury Secretary Paulson gets 'open dialogue' with China.

The United States and China announced an opening of dialogue between the two countries on a ranging number of economical issues, most notably the Yuan, China's official currency. Treasury Secretary Henry Paulson has come under enormous pressure from U.S. manufacturers and Congress, as well, to increase

Without a significant upgrade in the Yuan's worth, Congress has made overtures to implement punitive tariffs on Chinese exports. This has led many to believe China's concession of open dialogue to be nothing more than a consolation prize meant to bide time. Paulson has been downplaying the currency issue, however, looking instead for an augmenting trade relationship between the U.S. and China, and emphasizing American prosperity as a key to China's rise.

Lawmakers in Congress see the prospect of punitive tariffs as very attractive, despite the administration's refusal to back it amidst violating international trade rules. Quite ominously, 67 senators last year approved the procedural vote on the tariffs, increasing the pressure on Paulson to get something done. Administration officials have broadened the platform beyond the currency issue, including topics like China opening its banking sector to foreign competitors, protecting China's environment and reaching an accord for the two side's energy demands.

Business groups have lauded the recent developments, believing an official with the experience and knowledge of Chinese economy like Paulson will devote substantial time and energy to the U.S.-China economic issue. The two sides are set to meet later this year and twice each year after that.

Source: NACM; The Washington Post