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China Reluctant to Risk Its Success

Chinese Vice Premier Wu Yi arrived in the United States Monday for talks on trade and currency. China has recently widened its currency range, boosted interest rates and bank reserve requirements, and now invested in Blackstone Group.

CNBC Chief Washington Correspondent John Harwood said on CNBC’s “Keeping America Great” series that U.S. Treasury Secretary Henry Paulson is trying to keep the “long-term strategic economic dialogue” going on a steady path.

China is overwhelmed by congressional pressure for economic progress, which Krishna Guha, chief U.S. Economics correspondent for the Financial Times, is not sure the Chinese will be able to deliver.

“The Chinese policymakers see the need to slow the overheating of their own economy and understand that, in the long run, they need to rebalance it, but they’re worried that if they move too fast, they might create problems at home -- they might create unemployment at home,” Guha said. Policymakers don’t want to take too many risks, he said.

Harwood stated that U.S. congressmen are equally pressured.

“Congressmen are worried about the heat that they’re getting from their constituents,” he said. “Their point is to try to put the maximum amount of pressure on the Bush administration to do something vis-à-vis China.”