Not-So-Tough Talk on China

Edmund Andrews Capital Gains and Games April 5, 2010

Why do the spin-meisters keep doing this?

Just when Treasury Secretary Tim Geithner is enjoying a rare patch of fairly positive press coverage, the Treasury resorts to one of the oldest and hoariest ruses in the PR handbook for announcing something in a way to attract a bare minimum of public attention.

The WSJ just posted Geithner's announcement that Treasury is delaying its semi-annual report on currency manipulation, which must either accuse or acquit China of manipulating its currency, the renmimbi, to boost exports.

To his credit, Geithner is openly admitting that he's delaying the report because he doesn't want to making the Chinese mad ahead of "high-level meetings" over the next three month. That's more than the Bush Treasury did; on at least one occasion, it missed the Congressional deadline for months without even bothering to say anything.

But really. Making the announcement on SATURDAY between Passover and Easter? Washington was already almost shut down on Friday as people took an unofficial semi-religious three-day weekend. As if that wasn't enough, Treasury has not, as of this writing, even posted the statement on its website.

After I complained just now, Treasury sent me the statement. But their attitude seems to be that "openness" amounts to emailing a copy to reporters on the press list on a sunny Saturday before Easter, when nobody wants to work.

Here's the rub with Geithner. First, the RMB is increasingly out of balance right now for several reasons. Its economy is growing far faster and its exports are booming far more than ours; And China put a halt to its extremely cautious moves to let the RMB rise in value relative to the dollar. Second, there is no reason to believe that polite diplomacy will accomplish any more than it has for the past seven years, which is almost nothing

It's easy to understand why Geithner wants to avoid publicly brow-beating China. He might even be right. I don't think so, but reasonable people can disagree. But hiding the announcement makes me suspect that the Obama administration wants to climb down from some of its recent grumbling about exchange rates.

At the least, the cynical maneuvering is a bad tactic to protect a reasonable policy. At worst, its a bad tactic to disguise a really bad policy mistake.

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Not-So-Tough Talk on China

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