The US Treasury says that Paulson will discuss forex rates on his trip to Beijing this week. We’ve made significant progress on currency issues with China but great Yuan gains are needed, the spokesman says.
China will be loathe to move much on exchange rates as its economy slows along with demand for its exports. Bu Paulson has more leverage than one would imagine given the US political backdrop come January. He can really play good cop to the Democrats bad cop as the Dems are far more protectionist than the outgoing administration. China may find it in their interest to make some renewed moves on currency rates to keep the Democrats from launching a very destructive trade war.
