Sinomania!

Amidst the gilded spendor of the US Treasury Department's Cash Room, Treasury Secretary Hank Paulson kicked off his first visit to China with an important speech today showing that Paulson at least, if not the whole Bush administration, sees the benefits of the inevitable American-Chinese convergence. His message to the Beijing mandarins: "We are not afraid of Chinese competition. We welcome it."

Regarding China's currency, the "M" word (manipulation) was never uttered and the only urging on the Yuan was that China include it in the overall reform of the financial system, now underway.

And in a sure sign that Paulson's Treasury won't tango with Schumer-Graham (the moribund China trade war bill sponsored by Senators Charles Schumer (D-NY) and Lindsey Graham (R-SC)(see my previous posts), Paulson said "protectionist policies do not work and the collateral damage from these policies is high. By closing off competition and blocking the forces of change, protectionism reduces the losses of the present by sacrificing the opportunities of the future."

These comments may signal an important shift in China policy but sadly won't be covered much here in America. The Financial Times of London leads with it here.