Speaking at the Bloomberg New Economy Forum, a four-day event swarming with establishmentarians and globalists, former Treasury secretary Hank Paulson made the first case for a post-Trump China detente, when he said that the incoming Biden administration should start a new round of bilateral negotiations with China aimed at fair trade and competition, in effect undoing the past 4 years of escalating trade tensions between the two superpowers sparked by Trump's China hawks who rightfully see an ascendent China as the largest threat to the US over the next decade as even Bloomberg confirmed in its hypothetical look at the global economy in 2050.
"We’ll need to deal with structural and process issues that include services, not just goods," Paulson said adding that "the agreement should be done in phases with regular deliverables, beginning with easier issues that build momentum to tackle the tough ones."
Paulson also called for a shift away from what he called "reflexive reciprocity" to “targeted reciprocity” to ensure that the strategic competition between the world’s two largest economies won’t result in the U.S. closing itself off to the world. In other words, a return to the type of globalism that led to the evisceration of the US middle class in recent decades.
The former Treasury Secretary also said that the U.S. should consider removing tariffs on goods from the Asian nation once it has extracted a "reciprocal and tangible benefit" from China, defined by benchmarks in a phased bilateral trade agreement.
After the US and China signed the first phase of a trade agreement in January,the relationship soured soon after as Trump blamed Beijing for not doing enough to contain Covid-19. Trump then also issued a number of trade and investment restrictions and sanctioned Chinese officials for their crackdown on human rights in Hong Kong and China’s western region of Xinjiang.
According to Bloomberg, two years ago Paulson warned that the U.S.-China relationship was on a trajectory to establishing an economic iron curtain. On Monday, he said that unfortunately, many of his predictions have panned out.
It will be interesting to see how Paulson's vision will be implemented considering that in a nation that has never been more polarized, a vast majority agrees on one thing: China is bad, as a recent Pew survey found.
Of course, this is the same Hank Paulson who back in 2015 burst out laughing when during an exchange at the Milken Institute admitted that his catastrophic policies had made wealth inequality wider, ultimately ushering in Donald Trump as president of the US. For those who missed it, in April 2015 Hank Paulson and Robert Rubin sat down with Sheryl Sandberg and Tim Geithner at an event hosted by Michael Milken (no less), to discuss a variety of topics. Around a half hour into the discussion, Sandberg asks Paulson about income inequality. Here’s what happens next:
Sandberg: “Yeah, so let’s follow up on a bunch of the things we were [talking about]. Let’s start with income inequality.”
Paulson: “Ok, well.. income inequality. I think this is something we’ve all thought about. You know I was working on that topic when I was still at Goldman Sachs..”
Rubin: “In which direction? You were working on increasing it.”
Paulson then bursts out laughing: "Yeah! We were making it wider!"
And it is those very policies that led to record wealth inequality - which included a perfectly harmonious relationship with China - that Paulson would like renewed under the Biden administration.