Monday, August 29, 2005
On the Hu trip, I think he himself will not raise any economic issues that might anger the US. It is in his interest to make this trip a great success, since he needs to establish his foreign policy credentials. Therefore, I would not expect him to raise the Unocal issue himself, unless someone asks him about it. In response to any questions about Unocal, he will probably say something like "Chinese companies now make decisions according to market principles....etc." He will not raise the currency issue himself, but I am sure someone will ask him about it. To this sort of questions, he will emphasize that China acted independently in switching to a basket peg and will continue to follow an independent foreign exchange policy, guided by market principles....etc. In sum, he will deflect any critical comments with his usually mild and cautious manner. He will probably emphasize friendship, cooperation (in the war on terror), and mutual benefits.