China trade negotiations

Implications:

Despite U.S. pleas China seem intent on following it's own timetable on Yuan strengthening.....

China gives U.S. a lecture on "building socialism with Chinese characteristics in an independent and self-reliant manner"

On slowing GDP.....Cina has the poential and conditions to maintain fast economiic growth for a fairly long time"

On the U.S. perception of China, Vice Premier Wu Yi said "We have had the genuine feeling that some American friends are not only having limited knowledge of, but harboring much misunderstanding about, the reality in China. This is not conducive to the sound development of our bilateral relations"...........Ouch!

 

Analysis: It seems to me that we are being treated as a "Paper Tiger"

I checked with a source close to PBoC and asked his opinions on Yuan appreciation....
His comment was that the visit by Paulson and Bernanke is being viewed as a routine top level working visit to discuss bilateral relations.

China will discuss the Yuan.

China will say that the Yuan will strengthen step-by-step however the disagreement will occur over the pace of the strengthening. China will accept a pace of 3% - 5% (and 5% is really pushing it for the Chinese) over the coming years until China is ready to free-float their currency.When they float their currency China intends to compete vigorously with other reserve currencies.