Scott Eldridge II reporting:

The economic dialogue is underway in China, and according to The Washington Post the talks got off to a fiery start, with Treasury Secretary Paulson insisting that China allow the yuan to float according to market forces, and Chinese Vice Premier Wu Yi giving a 20-page opening statement, that covered 5,000 years of Chinese history and reminding her U.S. counterparts that China, like the U.S., has to look out for its own interests. It is a familiar refrain to hear that the U.S. officials, and people, don’t understand their Chinese counterparts, one that is not always inaccurate. Read the story here.
Some things I found particularly interesting:
Vice Premier Wu is highly respected by her U.S. counterparts and is considered a formidable opposite at any negotiating table. She raises the issue of China’s growing labor force, and again said that U.S. officials did not fully understand the differences and needs of China’s economy.
According to the Washington Post:

“Some American friends are not only having limited knowledge of, but harboring much misunderstanding about the reality in China,” Wu said, according to a copy of her remarks provided by the Ministry of Foreign Affairs. For example, Wu noted that China needed to create enough jobs to absorb an estimated 300 million rural workers into its urban economy in the coming two decades.

Maybe they should start reading Guanxi.

Also, according to the Post,

As the meetings took place, China set the yuan’s daily midpoint at 7.8197 per dollar, a gain of 3.7 percent since its revaluation in the summer of last year.

This is interesting. China revalued the yuan about 2 percent last summer, and since then, it has only moved in small, small amounts, against a basket of currencies widely believed to include the Japanese yen, Korean won, euro and the U.S. dollar. However, most officials consider the yuan to be essentially pegged to the dollar. The revaluation to 7.8197 will likely be interpreted in every direction in the coming days. We’ll certainly check in to see if any of Guanxi’s currency and economics contributors write on this topic in the near future.

Ask anyone who has covered this sort of news in Washington, and it is nice to see the change, with Paulson “taking the gloves off” a bit. Those of us far away from the action think it would be great to see this back and forth in person.

Well this makes for a first day blogging hat trick