Paulson, with Bernanke, knows how to print money to rip off Americans.
Along with trade-deficit tools
Who will be the next to rip off.
~~
Paulson Previews U.S.-China Strategic Economic Dialogue
6/10/2008 11:54 AM ET
Getting the economic relationship between the U.S. and China "right" is the key goal at next week's U.S.-China Strategic Economic Dialogue, Treasury Secretary Henry Paulson said Tuesday. Paulson previewed the SED meeting at the Carnegie Endowment for International Peace, outlining his desire for "sustainable economic growth" over the next 10 years.
The SED meeting will focus on five areas, Paulson said, including managing financial and macroeconomic cycles; developing human capital; the benefits of trade and open markets; enhancing investment; and advancing joint opportunities for cooperation in energy and the environment.
"Both the United States and the Chinese economies face current challenges, including adjusting to higher energy and food prices," Paulson said.
While the U.S. is struggling with the deepest housing slump since the Great Depression as well as a credit crunch, China is facing rising inflation as well as "external macroeconomic imbalances," Paulson noted.
"China's imbalances stem largely from an economic structure that has become too heavily dependent on industry, investment and exports," he explained. "This has led to a growing trade surplus, high energy use, environmental degradation and rising domestic inequality."
Specifically, Paulson cited the disparities in savings rates between the two countries, with the United States having a savings rate that is far lower than desired, while China's rate is too high. He cited China's excess precautionary savings as a major factor in the trade surplus.
At the conference, top U.S. and Chinese officials will "examine how we can promote mutual interests, including enhancing innovation and developing and protecting intellectual property intensive industries, improving food and product quality and safety, stopping the global trade in fake products, furthering transparency and rule of law, and supporting green energy and environmental product markets," the Treasury Secretary said.
Paulson discussed the challenges poised by rising energy prices that the U.S. economy is struggling with. The price of gasoline is now over $4 per gallon of regular unleaded in most of the country, and climbing crude prices indicate that there is no relief in the short term. In addition, food prices have also continued their steady climb, placing a burden on U.S. households.
At the same time, increasing oil demand from China has been cited as one of the factors pushing prices higher. Paulson discussed how these two oil-dependent countries are facing the energy challenges.
"As the two largest net importers of oil, China and the United States face similar challenges," Paulson said. "We have a strong and shared interest in avoiding supply disruptions, increasing energy efficiency, promoting the efficiency and transparency of the global energy markets to the benefit of all oil importing nations, and expanding the availability and use of alternative energy sources."
The Treasury Secretary urged China to go beyond joint efforts. He cited China's "numerous plans and ambitious goals" for reducing energy consumption, stating that "while I applaud this continued focus and am encouraged by this progress, further results cannot come fast enough."
Specifically, Paulson was critical of China's price controls on fuel. He noted the results of the United State's similar attempt during the oil crisis of the 1970s.
"Rather than achieving our intended result, we experienced winter heating oil shortages, supply problems, rationing, and a reduction in domestic oil and gas investment and exploration," Paulson said. "In some cases we attempted to control output prices without being able to control input prices, forcing operating losses and large cuts in supply."
The Treasury Secretary urged China to allow the market to function freely, without price controls.
"The United States learned that price controls interfere with the natural equilibrium of markets to match supply and demand, and lead to shortages," he said. "And because market forces can never be completely eliminated, price controls often lead to smuggling and corruption."
Paulson stressed the removal of barriers, both tariff and non-tariff, that China places on environmental goods and services.
"A high priority should be eliminating barriers on products, goods and services that can improve the health and welfare of the Chinese people," he said.
The SED dialogue, launched by President George W. Bush in 2006, includes twice-yearly meetings. The last meeting was in December, when goals for the continuation of dialogue were listed as: updates on the energy and environment plans, the beginning of exchange on investment policies, practices, and climates.
"The value of the SED to economic issues is clear," Paulson said. "The SED also increases U.S. - China collaboration on security and other key international issues, making our overall relationship stronger and broader."
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