Geithner, ‘Uncle’ Wang to Spar Over Yuan in China
The Chinese official who is facing Timothy Geithner in Beijing today jokingly calls himself the Treasury secretary’s “uncle” because of a family connection. Geithner may one day call him “Premier.”
Vice Premier Wang Qishan leads the delegation meeting with Geithner and Secretary of State Hillary Clinton at the Strategic and Economic Dialogue, which is discussing yuan revaluation, Europe’s debt crisis and North Korea’s nuclear program. Wang, who oversees China’s financial sector, is mentioned for membership in the ruling Politburo Standing Committee and as a successor to Premier Wen Jiabao, two China experts say.
Geithner says Wang is China’s “definitive preeminent troubleshooter, firefighter, problem solver.” He is also a high-level emissary to business leaders: During a three-month stretch this year, Wang met with Citigroup Inc. (C) Chief Executive Officer Vikram Pandit, JPMorgan Chase & Co. (JPM) CEO Jamie Dimon and UBS Investment Bank Vice Chairman Leon Brittan.
“Wang has done everything and he’s very good at it,” said Robert Hormats, the U.S. undersecretary of state for economics, energy and agriculture and a former Goldman Sachs Group Inc. banker who first met Wang in the 1980s. “He knows the American relationship inside and out. He has had great relations with a number of American officials for decades.”
China’s top leaders regularly tap him to extract the country from crises, including the 1998 collapse of a provincial investment company and the 2003 outbreak of a deadly virus in Beijing. As mayor, Wang also headed the Chinese capital’s preparations for the 2008 Olympic Games.
Dimon said in an e-mail that Wang was “extremely smart, engaged and deeply knowledgeable about issues, finance and history.”
Yesterday Wang met Federal Reserve Chairman Ben S. Bernanke, where they talked about the global economy, the official Xinhua News Agency reported. Wang also dined with Geithner last night. Today, in opening remarks for the talks, Wang said the European debt crisis has caused a “chain reaction,” affecting market confidence.
Li Cheng, director of research at the Brookings Institution’s John L. Thornton China Center in Washington, says Wang’s experience means he’ll likely be named to the standing committee in 2012, giving foreign bankers a familiar face at the top of China’s power structure.
Wang, 61, is also being mentioned within the party as a possible candidate to succeed Wen in 2013, when the country will be looking for a seasoned hand to guide China to full yuan convertibility, said Li and Victor Shih, a professor at Northwestern University in Evanston, Illinois, who studies Chinese politics and finance.
“He would help push for the convertibility of the yuan in a very positive way,” Shih said.
Geithner nudged Wang on the yuan from the outset of the meeting today in opening remarks at the Diaoyutai State Guest House in western Beijing.
“Allowing the exchange rate to reflect market forces is important” for China to maintain low inflation and to help shift resources to “more productive higher value-added activities,” Geithner said.
The yuan’s value has been fixed to about 6.83 to one U.S. dollar for almost two years.
Wang won’t have the final say. He is one member of the 25-person Politburo, which sets policy for the government and the ruling Communist Party. And up to now, the government has resisted U.S. pressure to end or loosen the peg.
“Only the authorities of a sovereign country have the right to decide how to form the exchange rate,” Assistant Finance Minister Zhu Guangyao said in Beijing on May 20.
Li Keqiang, the executive vice premier, is one of nine current members on the standing committee, and is the front-runner to succeed Wen, Brookings’ Li said.
Yet Wang’s experience, which includes stints as head of China Construction Bank Corp. (939) and China International Capital Corp., the country’s first investment bank, as well as deputy governor of the central bank, outshines Li’s resume, said Brookings’s Li.
Hormats said Wang had the “can-do” leadership style of former Premier Zhu Rongji, who led a drive to sell shares of the country’s biggest state-run companies to foreign investors and shepherded China’s 2001 entry into the World Trade Organization.
Wang, as vice governor of southern China’s Guangdong province, was tapped by Zhu to oversee the bankruptcy of Guangdong International Trust & Investment Corp. after its 1998 collapse due in part to soured real-estate investments.
A native of northern China’s Shanxi province, Wang often speaks without notes when giving speeches, peppering his remarks with anecdotes. He didn’t respond to a request for an interview.
In a Washington speech last July, Wang called himself Geithner’s “uncle,” referring to ties he had with the Treasury secretary’s father, Peter, who headed the Ford Foundation’s office in Beijing in the 1980s. Geithner, 48, who pronounces Wang’s name with the correct Chinese tones, was a Dartmouth College student in Beijing in the early 1980s.
On the same trip, Wang met with President Barack Obama at the White House. The vice premier received an autographed basketball.
A year earlier, speaking at Washington’s Wardman Park Marriott, Wang’s sense of humor came out as he explained that while China’s economy was large -- it is now No. 3 in the world -- its per capita gross domestic product was a fraction of that of the U.S. He told Finance Minister Xie Xuren to check out then-Treasury Secretary Henry Paulson.
“Look at his wallet,” Wang said. “He has a really fat wallet.”
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