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 The New Republic's Noam Scheiber again burrows into the bureaucratic machinations of the Treasury Department, concluding that new Secretary Timothy Geithner's biggest White House rival won't be his former mentor and head of the National Economic Council Larry Summers. Instead, he needs to watch out for Secretary of State Hillary Clinton, who may have designs on Treasury's responsibility for economic relations with Beijing. - Bill McConnell
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Geithner is correct that China believes in government control of the currency. They do not yet have enough confidence in their own financial institutions to open up the currency to free convertibility. Everything in China is done gradually. The Party will not make fast and dramatic changes because that is a risk to their stability and prosperity. However they are gradually moving in the right direction. This is the message that the Chinese government will continue to pass on to the Obama administration.
All recent US presidents have started out with aggressive rhetoric against China. After a few months, the reality of talking nicely to your largest lender and business partner will (hopefully) set in. I am also sure that Obama would love to sign a deal for 100 new Boeing aircrafts sold to China! I think he "promised" 3 million new jobs, and that is hopefully a net figure rather than a gross figure!
Geo-politically, Obama and Hu Jin Tao have a lot in common. They both talk a lot about using all diplomatic means to solve global conflicts. Trade sanctions are not diplomatic means, and they are very dangerous. Free trade and commerce lifted more than 200 million hard-working Chinese people out of poverty. It is unlikely that retaliatory trade sanctions will be used by China, even if the US goes down this horrible path.
Obama is hopefully able to keep "his" union bosses in check, and lead them away from their anti-China and trade barrier instincts. The union bosses have some explaining to do this spring when Obama has to decide how to make Detroit competitive again.The old "work-slow" union practices have to go, and the unions need to take on a new leadership role to drive design innovation, technology and manufacturing efficiency in the auto industry. Can they do that in three months time?