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Tim Geithner returns to Washington with enough loot to give Customs officials pause for thought. While his predecessor, Hank Paulson, struggled to wring more than a few half-baked concessions out of China – an investment banking joint venture here, some grudging currency appreciation there – Mr Geithner’s visit coincided with a flurry of deals. A Chinese group, little-known but essentially an amalgam of former state-owned enterprises, stepped forward to relieve the bankrupt General Motors, soon to be majority-owned by the US government, of its highly visible and somewhat toxic Hummer brand. Beijing executed the deal perfectly: there is no technology transfer, management and manufacturing will stay in place in the US and 3,000 jobs are saved.
Simultaneously, China’s sovereign wealth fund coughed up more cash for Morgan Stanley to help the US investment bank repay – uh, aid from Washington. And sceptical students scoffing at his protestations of fiscal rectitude did not stop Mr Geithner claiming Chinese backing for US policies. Not bad for a few days’ work.
What he cannot claim is a free lunch. For most of his time in Beijing, the US Treasury secretary was on the defensive, justifying US policies rather than berating those of China. That reversal from the Paulson era in itself speaks volumes. China paid a small price for its concessions; all in, the bill came to about $1.5bn, or about the amount China earns from the US in interest in just over a week. There are plenty of opportunities to extract payback. The row over US imports of Chinese tyres is an early case in point. US unions claim these imports cost 7,000 jobs and are demanding that Barack Obama, the US president, slap on restrictions. That will be harder to do when China has just saved 3,000 GM jobs – not to mention, on Hummer’s year-to-date numbers, demand for 48,000 tyres. As for the renminbi, no surprise that it moved barely an iota.
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