Why America's Point Man On China Is Running Into a Wall.(Periscope; Talks)(Henry Paulson)

Byline: Stephen Glain

Is Henry Paulson's big China offensive dead in the water? As the U.S. Treasury secretary preps for the next meeting of his widely hyped Strategic Economic Dialogue in Beijing this week, some China watchers are heralding its demise. Paulson left as CEO of Goldman Sachs and took the Treasury post on condition that he'd be America's point man on China, yet so far he's not even meeting the right people. Prime Minister Wen Jiabao declined to lead China's side, shunting the job off to Wu Yi, who will be a lame duck when she meets Paulson this week. Worse, her likely successor is thought to be Zhang Jiang, a provincial party chief who learned his economics at Kim Il Sung University in Pyongyang, hardly a bastion of free-market liberalism.

Treasury officials hope Paulson will end up working with Li Keqiang, a highly regarded reformer and rising star in the Communist Party. But it's unlikely anyone on the Chinese side will give much more anyway. The dialogue was supposed to work like this: Beijing would make concessions on hot issues like piracy and the value of the yuan, and Paulson would dampen China bashing from Washington. It hasn't happened, because China was never going to make real concessions to relieve protectionist pressure, which has been rising in Congress and from U.S. presidential candidates anyway. It's not easy to manage a relationship with China when ...