China Update…

Source: AP

Update from our China post  yesterday — U.S. Treasury Secretary Geithner appears to have had a nice meeting with Chinese leaders today.  Smoothing over any ruffled feathers of the recent past.  Stressing cooperation.  Setting it up nicely for a little Obama administration “good cop, bad cop” routine, starting with a meeting in late July, with Secretary of State Clinton playing the role of the baton-wielding heavy.

At the same time, the Chinese government today arrested a former protestor from the Tiananmen Square movement twenty years ago.  The Chinese government is nervous about the anniversary of the democracy protests coming up on Thursday.  Read a previous post on the contradiction of political monopoly and economic pluralism

A NYTimes article today suggests that Obama’s China strategy is “kinder and gentler” than Bush’s was, which I, and some other China observers, do not agree with.  In any case, it is early.  Read Elizabeth Economy on the subject in Foreign Affairs. 

Finally, worries about China’s banking system over the medium term are increasing due to strong, though slowing, credit growth, especially lending to unprofitable state-owned enterprises.  See an Economist article, as well as a Fitch report (email me at, on the matter.

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