Who is Madame Wu Yi?

♠ Posted by Emmanuel in , at 5/19/2007 03:20:00 AM
Chinese Vice-Premier Wu Yi is best known as US Treasury Secretary Hammerin' Hank Paulson's sparring partner in the US-China "Strategic Economic Dialogue" circus, which comes to Washington, DC next week. According to Paulson, she is a "force of nature." Forbes concurs, claiming that she is the third most powerful woman in the world after #1 German Chancellor Angela Merkel and #2 US Secretary of State Condoleezza Rice. If having to confront China-bashing congressmen next week wasn't enough, she is also involved in China's drive to secure IP law compliance. A tall order, but remember that she was called upon to fix the SARS epidemic in China to good effect. Befitting a diplomat, here is her optimistic and positive take on "win-win" US-China relations from the Wall Street Journal:

China-U.S. business and trade relations are cooperative in nature. It is true that problems, differences and even disputes have arisen in the course of the rapid expansion of our relationship. But mutual benefit and win-win progress remain the defining feature of our business and trade ties. This is the larger picture that no problem can overshadow. As to differences and disputes, it is important that China and the U. S., both being stakeholders and constructive partners, should address them in a coolheaded, objective and responsible way.

Economic globalization is the trend of our times. China and the U.S., having both benefited from economic globalization, need to rise to its challenges. We both need to make necessary economic adjustments, adopt sound and reasonable economic and trade policies, and seize the opportunities created by globalization to promote economic development and make life better for our peoples. However, there are some in the U.S. who overstate the U.S. trade imbalance with China, and blame China for problems that arise as the U.S. adjusts its economic structure to respond to challenges posed by economic globalization. Some even advocate trade protectionism. Such irresponsible acts can only obstruct economic globalization and hinder the fundamental interests of both China and the U.S., our peoples and the sustainable and steady growth of the world economy. China and the U.S. need to, based on our respective national conditions, properly address issues arising in the course of our respective economic adjustment, and resolve bilateral economic and trade issues through enhanced dialogue and consultation, and in a reasonable manner. Attempts to politicize trade issues should be resisted.

As we know, trade deficits are caused by a number of factors associated with economic globalization such as savings and investment correlations, the international division of labor and investment relocation. The U.S. trade deficit with China in goods is also a reflection of these macroeconomic factors. It does not reflect the overall and genuine movement of interests in China-U.S. business and trade relations. China does not seek a trade surplus. In the five-year development plan for 2006 through 2010, the Chinese government explicitly set a basic goal of sustaining economic growth and promoting balance in international payment and macroeconomic stability by expanding domestic demand and particularly, consumption demand. We have taken steps including expanding market access, enhancing intellectual property protection and increasing imports to promote balance in trade. The U.S., as a global leader in science and technology, should give full play to its comparative advantage, enhance mutual trust and relax export controls to boost the competitiveness of American companies, reverse the trend of dwindling market share of American high-tech products in China, and reduce its trade deficit with China.

UPDATE: Despite the diplomatic WSJ op-ed, the Washington Post suggests Wu was quite displeased with the trade measures aimed at China, particularly over intellectual property:
The Chinese are so mad there had been talk Wu might stay home to show "dissatisfaction and anger," said Xu Mingqi, an international economics professor at the Shanghai Academy of Social Sciences, a government-affiliated think tank.

Wu relented, however, and on Tuesday and Wednesday she will lead a delegation that includes 14 government ministers...

In recent months, official rhetoric on U.S.-China trade has grown increasingly hostile.

When the United States imposed the tariffs on paper, China said the sanctions violated a pledge to resolve trade disputes through dialogue. On the intellectual property issue, Wu['s] response, roughly translated, was "If you want a fight, let's fight."

Next week will be interesting. Nevertheless, I remain convinced that nothing substantive will happen at the second round of the "Strategic Economic Dialogue" (or is it a "Monologue" of two sides talking past each other?) If China is not branded a currency manipulator by Treasury in its next report on foreign exchange, then brace yourselves for the long-rumored veto-proof, WTO-legal action against China.