China pushes back against Paulson

Regarding that in particular I believe you haven't the foggiest idea what you are talking about.

Actually, I'm quite familar with global economics. But I did retract using the word "placate" in my last post.

There is a fundamental economic change that needs to take place. Hence they are hounding China because that is where the change needs to take place.

Yes, I agree, changes that will benefit both the US AND China. Changes that China may not even realize is good for them as well. I was originally arguing against the point of view that somehow America is helpless to do anything about China. That somehow China is robbing America and politicans are helping the fleecing of America. That many of the actions that many freepers would like happen (such as a more confrontation approach to China), are not happening because not everyone agree with them. It's not just the issue of the rich in powerful places being unpatriotic.

There is a fundamental change that needs to take place, but at the same time there are many other issues at hand. The government wants the change. The people want the change. Even many in corporate America and even many who heavily invest in China want the change.

I don't doubt things can always be better. And there will always be friction as the two countries find common ground.

On the flip side there are other issues such as security and political concerns. China is a very unstable country hence they are being handled with kid gloves.

Yes, I won't argue with you there.

The US government sees its interests in changing the way China does stuff. At the same time they don't see it in their interests to spark a riot in the process and create substantial political or military problem.

Great, so far I don't hear anything I don't like.

Somewhere in between point A and B is where they sit. No one is talking about 'cutting off China', at least not entirely, but not very many are satisfied with the situation either.

Yes, I'm good with that. Trying to bridge a gap as long as the goal isn't cut off China.

China trade relations are the worm in our apple. How to get the worm out of the apple without demolishing the apple is the trick.

Again, I'm all for better US/China relations. I don't believe I ever suggested the US should always give in. China needs to change as well. And for the next several decades, relations may be tense, but I believe will get better.

But I merely oppose the belief that somehow China is the cause of all of America's problem and that American's are helpless to do anything about it. Not everyone wants a contentious relationship with China. And continued attempts by government official for better US/China relations does not consitute betrayal.

Yes, but only because they are corrupt...and devoid of American patriotism.

I beleive they do have America's best interest when going over there.

I believe they do have America's best interest when going over there.

On what empirical basis? Where is the negotiating success...?

On what empirical basis? Where is the negotiating success...?

Disagreements can't be resolved in one meeting and I'm sure you know that. But there are some good windfall. Did you know that a deal has been agreed to for the purchase of four Westinghouse reactors worth $8 Billion. I'm sure Paulson's meeting indirectly expedited that decision on the part of the Chinese.

Disagreements can't be resolved in one meeting and I'm sure you know that.

I.e., 16 years and counting.

But there are some good windfall. Did you know that a deal has been agreed to for the purchase of four Westinghouse reactors worth $8 Billion.

How much...in just one month... is the Chinese Government's INTEREST on the U.S. securities they hold?!

I.e., How much are WE paying for those reactors we are sending them? In effect...100%...

An honest person sees right through this charade of theirs.

I'm sure Paulson's meeting indirectly expedited that decision on the part of the Chinese.

Irrelevant window-dressing.

If they want to make a splash...they need to buy cars, ships, trains, planes, etc. $1 trillions worth. To start.

But even suddenly insitituting 50-50 fairness in trade is apparently completely out-of-the-question.

I.e., 16 years and counting.

Don't be surprised when it's 36 years and counting. US/China relations are better today than they were 16 years ago.

I.e., How much are WE paying for those reactors we are sending them? In effect...100%...

Well, now, that would be foolish for the seller to pay. I doubt that is what is happening.

If they want to make a splash...they need to buy cars, ships, trains, planes, etc. $1 trillions worth. To start.

China is just less of a consumer society than the US. It isn't the only one either. From S. Korea to Taiwan, the level of consumerism is just less than the US.

There are alot of things the Chinese want to buy. Just as the US (and Japanese and European countries) have overseas holdings that number in the 100's of billions of dollars, the Chinese would like to do the same. Unfortunately, they are blocked at every turn. For a country with a trading volume that ranks amonst the world's power (expected to surpass Germany in a couple of years to become second largest), it is nowhere near any of the major players in overseas holdings. $17 or so billion would have been in US circulation if the Unocal deal had gone through. I'm sure China would buy out Ford or General Motors as well, but unlike Daimler buying out Chrysler (with absolutely no public discourse) , it'll only be a pipe dream for China.....for now.

Also, there is a slowly increasing trend of Chinese companies investing in America. It's not significant when compared to other foreign operations in America, but is slowly taking root. Your grand kids may someday work for a Chinese manager.

Ironically, there are disgruntled people in China about US/China trade (and I'm not talking about the communist types). They feel that America gets to invest in China but not the othe way around. They also feel that the level of technology transfer is not sufficient enough (whereas you feel it is too much). And they feel that China is giving away too much. They do want to buy American products, but they are definitely seeking to become an information society...... I'm sure they'd be willing to trade their textiles industries for companies like Microsoft, IBM, HP, Dell, Intel, Boeing, etc. I'm sure they would want to buy more slots at places like MIT, Cal Tech, and Stanford.

So you not really looking to just balance the trade, you're looking to balance the trade strictly through Chinese consumerism. And the Chinese may have a different path to balancing the trade.

I beleive they do have America's best interest when going over there.Friend of China

Not only did you not respond to my pointed accusation thereto...you offered no evidence of your own.

Paulson, for example is in fact pretty manifestly corrupted by his financial position:

Friend of China
By Frank J. Gaffney, Jr., Center For Security Policy
(Washington, D.C.): At this point in our history, is what we really need a Treasury Secretary who is a pedigreed "Friend of China?" That is a term the Communist Chinese apply to individuals who have proven their affinity for the People's Republic by service of one kind or another. Communist China arguably has no better or more powerful friend in the whole of the Western world than the man President Bush has just appointed to be this nation's chief financial officer: Henry Paulson.
Mr. Paulson has made a very successful career, an immense personal fortune and an astounding financial empire at the New York-based investment house, Goldman Sachs. In no small measure, those accomplishments are a product of his extensive personal and professional dealings with the People's Republic of China.
In fact, in his role as chairman of that enormously successful firm, Mr. Paulson proudly notes that he has made about "seventy trips to China since late 1990." No one logs that kind of time, or enjoys the kind of entree to the Communist power structure it suggests, unless he is considered a true "friend of China."
Why should we be concerned that an individual who has played, according to Goldman's Vice Chairman, Robert Hormats, a "very crucial" role in the company's many China-related financial transactions - including "really immers[ing] himself in a lot of activities in China" - would become Treasury Secretary?
Whither China?
The U.S.-China relationship is a complicated one - and is likely to become considerably more so in the years ahead. On the one hand, China is a very important trading partner with this country, albeit one that engages systematically in unfair practices, often in violation of obligations it assumed upon entry to the World Trade Organization, at enormous cost to this country's balance of payments. The PRC is also the largest holder of American debt; its unwillingness to buy more Treasury notes, let alone to unload even a portion of the hundreds of billions worth it is holding now could have profound, adverse repercussions on our economy.
On the other hand, as a Pentagon report issued shortly before the Paulson nomination was announced makes clear, Communist China is translating some of its vast new wealth into activities and capabilities clearly antithetical to U.S. interests and security. These include: the rapid modernization of the People's Liberation Army and its air, naval and space warfare elements, to give the PRC vastly increased offensive capacity against even modern militaries like ours; the acquisition of forward operating facilities in key strategic chokepoints and regions around the world, including the Caribbean and Latin America; close ties with every despotic regime on the planet; and direct control of, or at least assured access to, an ever-larger percentage of the world's energy resources.
Decisions, Decisions
Against this backdrop, what sort of role will a "friend of China" like Henry Paulson play in a Bush Cabinet where he has been assured that he will get to shape policy, not simply flack for it?
Let us stipulate that, as his spokesman at Goldman Sachs put it recently, "When Mr. Paulson becomes Secretary of the Treasury, he will have totally divorced his interests from those of Goldman Sachs." Even if he were actually to liquidate his huge holdings of Goldman stock (as opposed to merely placing them in a "blind trust"), he will have a difficult time avoiding a conflict of interest in addressing issues that will have huge implications for his friends and former colleagues at the firm - and for the United States.
Consider the following items that clearly fall within his prospective portfolio, to say nothing of what his input might be on matters directly related to national security policy and China:

- The revaluation of the Chinese currency to reflect more accurately its true value and reduce the contribution it makes to the PRC's competitive trade advantage. Friends of China have long made excuses for Beijing and resisted efforts to pressure it to float its currency.
- The offerings of PRC state-owned enterprises on the U.S. capital markets - many of which are economic dinosaurs that use the proceeds of such often-Goldman-managed and wildly oversubscribed stock sales to prop up their operations and free up Chinese government funding for other, nefarious purposes.
- This is especially true of Chinese "banks" - which the blue-ribbon U.S.-China Economic and Security Review Commission last year established amounted to "slush funds" available for Beijing to use to finance not only the business ventures of well-connected "princelings," but all manner of other nefarious activities in which the PRC engages overseas. These include: technology theft, espionage, intelligence operations, arms sales, alien smuggling and drug-running. Goldman is the lead investment bank for the IPO of one of the most egregious of such state-owned enterprises, the Bank of China.
- Chinese acquisitions of U.S. assets will fall under the ambit of the Secretary of Treasury in his department's capacity as chairman of the dysfunctional Committee on Foreign Investment in the United States (CFIUS). CFIUS has been reluctant - if not utterly unable - to see threats to American interests and security posed by acquisitions, some of which have been managed or endorsed by Goldman Sachs. It seems unimaginable that it will do better under the direction of one of China's best friends.

The Bottom Line
Henry Paulson is clearly a capable man and, but for his ties to China, would bring to Treasury stature and skills that are much needed. Those ties have earned him the right to be a Friend of China. They should disqualify him from being Secretary of the Treasury.

Don't be surprised when it's 36 years and counting. US/China relations are better today than they were 16 years ago.

I don't think I will take your word...or any "friend of China"'s word for that. Instead, let's just look at the trade balance [ now SIX-TO-ONE in favor of the PRC ], and the Chinese record on letting us inspect their secret military operations.

Well, now, that would be foolish for the seller to pay. I doubt that is what is happening.

How can you "doubt" that is what is happening...since you won't answer how much we have to repay China every year in interest on the securities so foolishly...and treasonously...sold them? Well. What is the interest?

Your failure to answer that speaks volumes.

Ironically, there are disgruntled people in China about US/China trade

There is no moral equivalency here. The Chinese government is communist...and all of the "private" entities as well...are arms thereto.

Whereas our firms are mere private profit-seeking entities. For China's government to buy up strategic U.S. assets such as UNOCAL, its technology, its mineral resources in the Mojave, and its leases in Asia all of which to China would be considerably more valuable than the face value of their offering...would be a security threat. And $18 billion "in circulation" does not justify any additional Communist security threat. You guys want oil? Buy it FROM Unocal. You guys want to have investors? Pay your people lots better. And let them invest. As it is, everything is a fairly clear proxy for your government. You don't fool anyone.

So you not really looking to just balance the trade, you're looking to balance the trade strictly through Chinese consumerism.

Try it. You'll like it. It's called free enterprise. Not Communist state enterprise.

And the Chinese may have a different path to balancing the trade.

B.S. They don't intend to "balance" the trade at all, until with their hoarded economic and industrial advantage they can attack the U.S.

They are looking for a "tipping-point" opportunity.

Today it'd appear the Chicoms & their hordes of slave labor own this nation lock, stock & barrel.

Of course they could never have done it alone.
The takeover took all kinds of help.

...American corporate help.

You need to be aware of who and what Paulson really stands for. And it isn't anything remotely connected to Patriotic national security...

June 28, 2006, 7:12 a.m.

Bears a Close Watch
China knows our next Treasury secretary well.

By Frank Gaffney Jr.

As the Senate Finance Committee considers President Bush’s nomination of Henry Paulson to be the next secretary of the Treasury, the question is not whether he will be confirmed. That seems assured, as senators in both parties behave like star-struck groupies in the presence of a Wall Street “master of the universe,” whose net worth, from his time as a senior executive of Goldman Sachs, is estimated to be on the order of $600 million.

Rather, the question is: Will any of his Senate interlocutors even bother to explore the nominee’s troubling fifteen-year ties to Communist China and the potential for serious conflicts of interest they pose, with national security as well as economic implications for our country?

It is hard to overstate the enormity of this problem. For calibration purposes, consider an historical parallel.

In the last century, the Soviet Union enlisted a relative handful of prominent Western capitalists to serve as financial advisers, engines of economic assistance, and agents of influence in Washington and other foreign capitals. Typically, these businessmen were rewarded with access to lucrative Soviet energy and other natural resources and exclusive arrangements for marketing their products inside the USSR.

Arguably, the most prominent of these Soviet fellow-travelers and enablers was Armand Hammer, who created a vast personal fortune and an oil and gas conglomerate in no small measure thanks to sweetheart deals he secured from the Kremlin. For decades, he found it to be good for business to use his wealth and favored standing in Moscow to promote the USSR’s interests among his peers in the capitalist world and politicians in their thrall.

Henry Paulson has been Communist China’s Armand Hammer. In fact, he has been vastly more effective than Hammer ever was in promoting his clients’ interests and enabling their access to Western economic assistance and high technology.

Under Mr. Paulson’s leadership at Goldman Sachs, the company has been instrumental to the growth of Chinese economic power and particularly to its penetration of Western capital and other markets. He has been directly involved in developing his firm’s relationships with the PRC, priding himself on having made 70 trips there since late 1991. Consider just a few of the deals Goldman has managed, underwritten or otherwise facilitated under Henry Paulson’s leadership:

In 2005, Goldman Sachs not only advised the China National Offshore Oil Corporation (CNOOC) in its attempted takeover of Unocal. It also strove to ensure that the Chinese state-owned company’s bid prevailed after ChevronTexaco offered $17 billion in an effort to keep Unocal in U.S. hands. CNOOC was able to up the ante to $18.5 billion for the American concern, thanks to a bridge-loan Goldman Sachs arranged (along with J.P. Morgan). Fortunately, despite the assiduous efforts made by Mr. Paulson and his firm to secure Unocal for Communist China, the American people and Congress strenuously opposed the transaction, leading ultimately to its derailing.

In late January 2006, Goldman Sachs purchased a stake in the Industrial and Commercial Bank of China (ICBC), China’s biggest bank, for $2.58 billion. According to press reports, Mr. Paulson’s personal stake in this transaction was $25 million.

This is but one of many such state-owned banks the Chinese are interested in bringing to Hong Kong and other Western capital markets. As I told the U.S.-China Economic and Security Review Commission last August:

These are foreign government-owned entities, not private firms. The Chinese government appears to be actively working with leading international banking houses [notably, Goldman Sachs] to shape the appearance, assets, liabilities, profit margins and public relations tactics of these state-owned enterprises.

Despite such efforts, the PRC seems simply to be dressing-up what were, until recently, insolvent banks in the hope that international capital markets will contribute to bailing them out. This process involves the off-loading of non-performing loans onto asset management companies in a fashion very reminiscent of the U.S. savings and loan crisis. Indeed, the PRC appears, in fact, to have modeled its strategy on the American experience.
No less worrisome is the fact that these banks’ assets include not only its non-performing loans, but also the loans made to various Chinese enterprises of grave concern to the United States, including elements of the PRC’s military-industrial complex; entities involved in the manufacture and perhaps the proliferation of weapons of mass destruction and their delivery systems; human and labor rights abusers; environmental despoilers; etc.

Speaking of banks, in May 2006, Goldman Sachs helped with the underwriting of the Bank of China’s IPO, listing $9.7 billion worth of its shares on Hong Kong's stock exchange. Among other problematic activities the Bank has engaged in has been the financing over the past fifteen years of extensive infrastructure projects like dam-building for the mullahocracy in Iran.

Along with the Unocal deal, one of Goldman Sachs’s few setbacks in its efforts on Beijing’s behalf was its planned launch of an initial public offering for another Chinese state-owned company, the China National Petroleum Company (CNPC). This IPO was expected to garner $10 billion, which would at the time have been the largest such transaction in the history of the New York Stock Exchange.

There was only one problem: CNPC owned a 40 percent stake in the national oil consortium of Sudan, the Greater Nile Petroleum Operating Company. (By contrast, the Sudanese government had only a 5 percent share.) Millions of Americans were outraged that Khartoum’s genocidal, slave-trading and WMD-proliferating government was using murderous “ethnic cleansing” techniques to clear Christians and animists from oil-rich areas in the southern part of the country and that anger was came to be focused on the CNPC IPO.

Faced with intense opposition, Goldman Sachs helped its client came up with a gambit aimed at finessing the Sudan problem by creating a wholly owned subsidiary, called PetroChina, ostensibly involving only Chinese domestic assets. Fortunately, the opposition did not buy the feint and the value of the NYSE listing was driven down by over 70 percent. (Even the $2.8 billion it attracted would likely have been unachievable had Goldman Sachs and the Chinese government not made concessionary deals with “friends of China” like BP and Hong Kong-based billionaire Li Kai-Shing.)

Li Kai-Shing owns, among other lucrative enterprises, Hutchison-Whampoa, regarded by many as the de facto Chinese merchant marine. In Goldman’s 2001 annual report, a Hutchison-Whampoa official was quoted as saying: “Goldman Sachs has been our valued counselor — advising us on key strategic transactions…Goldman Sachs continues to be loyal and dedicated to our business.” Among the most worrisome of Hutchison-Whampoa’s “strategic transactions” have been its acquisitions of facilities at choke-points in places like the Panama Canal, the Bahamas, Africa, and throughout Asia.

Goldman also advised Hutchison in its attempted buyout of the one-time telecommunications giant, Global Crossing, a bid that was withdrawn only after coming under heavy criticism. The Pentagon opposed the sale as it was deemed a “threat to national security because it would put Global Crossing's fiber-optic network, which is used by the U.S. government, under foreign control.”

Importantly, in his capacity as Treasury Secretary, Mr. Paulson would chair the already-controversial Committee on Foreign Investment in the United States (CFIUS), the entity responsible for evaluating whether foreign acquisitions of American assets are consistent with U.S. security interests.

It seems predictable that a man with Henry Paulson’s background, track record and relationships with Communist China will play a worrisome role in U.S. government deliberations. Unless he recuses himself from involvement in the following sorts of issues, Mr. Paulson assuredly will be participating in and exercising great influence over far-reaching decisions in which he has a vested policy, if not financial, interest. These will likely include, for example:

Contending with China’s ongoing manipulation of its currency which it uses to help sustain its advantageous trade relationship with the United States;

Addressing the strategic implications of the PRC being the largest holder of U.S. debt;

Considering the need to impose economic and perhaps other sanctions on Chinese proliferators, not at the subsidiary level (as has been done to date) but against their parent companies, when some of the latter may include Mr. Paulson’s former clients;

Allowing China to purchase strategic U.S. companies and assets;

Deciding whether to permit the export to the PRC of sensitive technology with ominous military applications;

Responding to continuing Chinese trade abuses and infringements on intellectual property rights; and

Evaluating how to end China’s unhelpfulness on such matters as the growing threat from North Korea and Iran — whether by offering it more “carrots” in the form of “grand bargains,” or by penalizing it including through U.S.-led efforts to encourage systemic political change in Beijing.

It is unimaginable that during the Cold War any president would appoint — let alone that a majority of senators would vote to confirm — a man like Armand Hammer as secretary of the Treasury. Now President Bush has nominated his Chinese counterpart and, all other things being equal, Henry Paulson will have the votes to be confirmed.

Since Communist China’s interests and those of the United States are likely to diverge ever more sharply in the years ahead, the very least that should be required of Paulson is that he recuse himself from involvement in matters of interest to the PRC. Unfortunately, as the foregoing list suggests, since China’s interests and activities figure so prominently in the Treasury portfolio, such a recusal would reduce the job to a part-time one.

In the absence of such a recusal, however, Paulson’s China-related work at Treasury will require an extraordinary level of transparency and accountability by members of Congress, the media, and the American public. We must be assured he is working for us in this job, not for Communist China as he did so successfully in the last one.

— Frank J. Gaffney, Jr. is president of the Center for Security Policy, the lead author of War Footing: Ten Steps America Must Take to Prevail in the War for the Free World, and a contributor to National Review Online.

National Review Online - http://article.nationalreview.com/?q=YTFmYjBmMzZkOTc0YTYwM2I4YTZlODFlYTRmZTdkYjA=

I don't think I will take your word...or any "friend of China"'s word for that. Instead, let's just look at the trade balance [ now SIX-TO-ONE in favor of the PRC ], and the Chinese record on letting us inspect their secret military operations.

Well, both sides acknowledge the imbalance will be there for years to come. And don't forget, Japan (America's closest ally in the Pacific) is doing the same thing (supressing the Yen). It therefore, prevents China from allowing a rapid rise in their own currency. Relations are good between the US and Japan. Even talks about the rearming of Japan. 40 years ago, that would have been unthinkable.

Your failure to answer that speaks volumes.

Well, what do you want me to say? I know how to do the math. 5%/yr of 500 billion is 25 billion. But that isn't directly paying for the reactors and I'm not sure how to convince you otherwise. The US government sold China the debt, China didn't acquire it by force.

Whereas our firms are mere private profit-seeking entities. For China's government to buy up strategic U.S. assets such as UNOCAL, its technology, its mineral resources in the Mojave, and its leases in Asia all of which to China would be considerably more valuable than the face value of their offering...would be a security threat. And $18 billion "in circulation" does not justify any additional Communist security threat. You guys want oil? Buy it FROM Unocal. You guys want to have investors? Pay your people lots better. And let them invest. As it is, everything is a fairly clear proxy for your government. You don't fool anyone.

You had mentioned the Mojave mineral resources in past posts. So, if the deal didn't include the mineral resources, would you be okay with the deal going through. Also, what's wrong with buying a company. What if the US government told Daimler to just buy automobiles and not the company? How is Unocal different (aside from your concern about the minerals in the Mojave dessert).

Try it. You'll like it. It's called free enterprise. Not Communist state enterprise.

Well, Cherry Automotive sells cars for 5000k. Is there something like that in the US? I mean, what China is going to buy from the US isn't going to be consumer items, at least not to the same degree. A Chevy Suburban just isn't a realistic thing to market in China at this time in history. However, there are all sorts of tech equipment that aren't made in China but made in the US for investment purposes. And can be purchased by institutions. Cray computers are one of them (or whoever the latest is now).

B.S. They don't intend to "balance" the trade at all, until with their hoarded economic and industrial advantage they can attack the U.S.

Honestly, how can we have a pragmatic debate if you are of the opinion that China's goal is to ultimately leverage industrial capacity away from the US?

They are looking for a "tipping-point" opportunity.

What's ironic about your belief in looking for a tipping point is that if China remains on the road of state control of it's industry, they will never surpass the US in global influence. History and just plain ol economics bears that out. However, if they do everything you suggest they do, in a gradual and controlled manner (gradual, I'm sure that's the part you don't like), they will acheive that (just by virtue of 1.3 billion people). By that time, they will be an integrated market. Most Chinese economist peg it to be around 2030 or so. However, I'm sure you'd like to see the exposure to market forces over night. That occured in Russia and to this day the Russian economy is not as dynamic as China's. It has taking them years (and more so to come to recover). China is slowly opening their markets, with a little prodding from the outside. And yes, it is healthier for them to go slowly with outside prodding.

You need to be aware of who and what Paulson really stands for. And it isn't anything remotely connected to Patriotic national security...

Well, first of all is Frank Gaffney Jr. bipartisan in his opinions? Also, Goldman Sachs does venture capital and they go all over the world, not just China.

The Chinese government appears to be actively working with leading international banking houses [notably, Goldman Sachs] to shape the appearance, assets, liabilities, profit margins and public relations tactics of these state-owned enterprises.

Well, Goldman Sachs are a reputable company, who else are they suppose to go to make an investment more palateable? And Paulson is a knowledgeable person in the area of finance and is familar with China. I don't see a conflict of interest at all. If anything, that proves he is the right man for the job. George W was an ambassodor to China. Should that have disqualified him for the President of the United States???

It is unimaginable that during the Cold War any president would appoint — let alone that a majority of senators would vote to confirm — a man like Armand Hammer as secretary of the Treasury. Now President Bush has nominated his Chinese counterpart and, all other things being equal, Henry Paulson will have the votes to be confirmed.

Therein lies the key word. "All other things being equal". They are not equal, we are not in a Cold War with China.

In the absence of such a recusal, however, Paulson’s China-related work at Treasury will require an extraordinary level of transparency and accountability by members of Congress, the media, and the American public. We must be assured he is working for us in this job, not for Communist China as he did so successfully in the last one.

He's in the media spotlight, he has to answer to the President, and he has to address Congress. What more transparency do you want? He knows what will satisfy the President and Congress and what won't. Ultimately, his actions or inactions will determine actions Congress will take. I'm betting Congress will hold off because Paulson will have done his job.

In fact, in his role as chairman of that enormously successful firm, Mr. Paulson proudly notes that he has made about "seventy trips to China since late 1990." No one logs that kind of time, or enjoys the kind of entree to the Communist power structure it suggests, unless he is considered a true "friend of China."

Being a friend of a neighbor does not mean enmity with your own family. Paulson is the right person for the job, because he will not have negative emotions towards his host and will therefore do a good job. Someone with a hawkish view will have negative emotions towards their host and will allow their emotions to distort the negotiations.

These include: the rapid modernization of the People's Liberation Army and its air, naval and space warfare elements, to give the PRC vastly increased offensive capacity against even modern militaries like ours;

At what level should China remain then? They still have outdated Mig 19's in their arsenal (though slowly fading them out). So, should they keep the Mig 19's till 2050? In today's modern military, an integrated force in communications and tracking is necessary. Should China not invest in this? Aerial refueling is necessary to field a modern force (or an old one for that matter). Should it be seen as a threat to the US if China pursues aerial refueling? Countries like Japan and Italy directly buy aerial refuelers from the US. Should China not pursue it....just because?

At what point should China not pursue military upgrade. Certain, as far as the size of it's military, they are no doubt less than half the size they used to be (as measured in personnel).

Well, both sides acknowledge the imbalance will be there for years to come.

While the PRC sits on a trillion dollar hoard....

Japan (America's closest ally in the Pacific) is doing the same thing (supressing the Yen). It therefore, prevents China from allowing a rapid rise in their own currency.

Bogus. China's wages are substantially under the entirety of East Asia...with the possible exception of Vietnam.

Relations are good between the US and Japan. Even talks about the rearming of Japan. 40 years ago, that would have been unthinkable.

Rearming them would not have proven necessary but for the nuclear enmity and proliferation fostered by China and their sock-puppet North Korea.

I know how to do the math. 5%/yr of 500 billion is 25 billion. But that isn't directly paying for the reactors and I'm not sure how to convince you otherwise.

Well, you have already conceded that it doesn't take them any additional monies...which continue to roll into their coffers in excess of $200 billion a year of surplus income.

The US government sold China the debt, China didn't acquire it by force.

No. Doesn't make it any less insidious that the Administration is complicit in economically undermining the U.S.

.. what's wrong with buying a company. What if the US government told Daimler to just buy automobiles and not the company

UNOCAL also has extensive high technology for off shore oil drilling rigs...which most of its U.S. competitors already have. Hence, it is far more attractive to China's government than it is to a US competitor. Yet a U.S. competitor for UNOCAL easily bested the PRC's pathetic offer. UNOCAL also has the leases for promising oil tracts to be developed off shore in East Asia. UNOCAL under American control would then sell this on the open market. If the PRC's entities get a hold of them...then its anybodies guess if there would be any open market access to that oil. Their trade-bloc deals with Iran and Venezuela do not appear conducive to an open market mind-set...or probability for the UNOCAL properties. And the Mojave minerals could have been severed...but was likely just as big an item to the PLA/PRC as the oil...cementing their monopoly. So don't hold your breath thereto.

However, I'm sure you'd like to see the exposure to market forces over night. That occured in Russia

Actually, it didn't really. They just had monopolies...handed from government to plutocrats. No intermediary free enterprise in between. And virtually no FDI. No Target or Wal-Marts.

Honestly, how can we have a pragmatic debate if you are of the opinion that China's goal is to ultimately leverage industrial capacity away from the US?

Honestly, how can we have a pragmatic debates so long as you are of the opinion that that ISN'T the communist party's goal? And I have a Six-To-One trade imbalance, $1 trillion dollar hoard, and a raft of China official's adamancy about trade to back me up. What do you have? Unsupported wishful thinking, and Beijing "talking points" Kool-Aid for dupes in the West.

What's ironic about your belief in looking for a tipping point is that if China remains on the road of state control of it's industry, they will never surpass the US in global influence.

Maybe.

History and just plain ol economics bears that out.

Not recent history.

Someone with a hawkish view will have negative emotions towards their host and will allow their emotions to distort the negotiations.

So...it's okay for the Chi-Comms to be hawkish and "distort the negotiations" but not the U.S.

And Paulson is a knowledgeable person in the area of finance and is familar with China. I don't see a conflict of interest at all.

Then you are being disengenous. Someone whose primary fortune was made catering to the whims of Beijing is comporomised in more ways than can be counted here, albeit Gaffney did a fair job of it.

They are not equal, we are not in a Cold War with China.

The playing field is in fact supposed to be equal in terms of trade...that's what they agreed to when they joined the WTO. And now are dragging their heels, and giving lip-service. And China is demonstrably in a trade war footing.

What more transparency do you want? He knows what will satisfy the President and Congress and what won't. Ultimately, his actions or inactions will determine actions Congress will take.

Indeed. A congress which he has heavy manipulative influence over with his company's individual campaign contributions... K-Street epitomized.

Who is the puppet? Hence, all the more reason no one such as him should have been picked.

The leadership of our political class is dominated by moral and mental midgets playing the role of the fool on the global stage. The American middle class will pay a heavy price for having let itself be seduced into entrusting so much power to such little people.

So...it's okay for the Chi-Comms to be hawkish and "distort the negotiations" but not the U.S.

I'm sure Paulson's counter part(s) did not have a hawkish or negative view toward America. If anything, they have their own objectors to deal with, who do.

If the PRC's entities get a hold of them...then its anybodies guess if there would be any open market access to that oil.

Isn't that just conjecture?

Actually, it didn't really. They just had monopolies...handed from government to plutocrats. No intermediary free enterprise in between.

No free enterprise whatsoever? I find it hard to believe.

And virtually no FDI. No Target or Wal-Marts.

Because everything collapsed as a result of the sudden transition.