State Department Seeking China Clout

The girl from (fill in Rustbelt hometown) wants a diplomatic third way for her State Department in dealings with China, a relationship which she describes as "the world's most important". Engagement with the burgeoning Communist superpower thus far has been dominated by a two-pronged military and economic approach led by the Defense and Treasury departments respectively. The military makes sure to stay on top of capabilities for sending China back to the Stone Age, while Treasury takes on most of the diplomatic burden, focused so much on commerce as that channel tends to be. So instead of Hillary Clinton wearing a funny hat and having her picture taken shaking hands, you get Timothy Geithner going out of his way to flatter a Chinese counterpart at his own expense, which he made a point of doing this week while considering the merits of a politically toxic proposal on changes to reserve currency.

But the State Department wants a piece of that action, and they're going to get it. Let's just hope there won't be too many cooks in the kitchen. Hillary's been a good role player in the Senate, when her own, ruthless ambition hasn't gotten in the way. If she can define her role her and be faithful to it, then all the better for US/China relations.

"Evolutionary"

Treasury Secretary Tim Geithner told reporters at a Council on Foreign Relations event today that the United States is "open" to suggestions from China's top banker that nations take steps to extend the special drawing rights of the International Monetary Fund toward a new global reserve currency. The dollar tracked down by less than two percent before picking back up by the time the Secretary clarified the government's position, several minutes later. Bottom line: the adminstration wants to send very clear signals that a strong dollar is in America's best interest, and as the president himself pointedly assured during his press conference last night, the United States has no plans to see a "new global currency" replace the dollar.

Geithner, demonstrating a bracingly misplaced confidence in his audience, explained that his understanding of the Chinese proposal had to do with moving the dollar itself, in its own "evolutionary" progression, toward a reserve currency that is more responsive to the demands placed upon it by the global market. As he put it:

We’re actually quite open to that suggestion – you should see it as rather evolutionary rather building on the current architecture rather than moving us to global monetary union.

Of course the effective headline out of this foolhardy attempt at drawing a reasonable distinction has been "Bumbling Treasury Secretary Supports Dumping Dollar". That's the reward for intellectual honesty these days. I won't pretend to understand the full scope of this issue, but I for one am very happy at least to see some mental flexibility from Mr. Geithner. To his credit, he resists the temptation to paint every scenario as black and white.

You never know, keep treating people like adults and they might just start acting like it.