WASHINGTON, 31 August 2003 — During his visit to Asia this week, US Treasury Secretary John Snow must wrestle with twin problems that confounded several of his predecessors — Japan’s comatose economy and an uneasy trade relationship with China. Snow will face a skeptical audience abroad, and must appease a hostile constituency among organized labor and Congress at home, with criticism peaking over alleged currency manipulation by Japan and China.
Billed a chance to spread the economic gospel of open markets and growth-orientated policy, Snow’s three-nation tour will begin in Tokyo between Sept. 1 and 2. He then moves on to Beijing on Sept. 2-3 and wraps up his visit by joining fellow finance ministers for Asia Pacific Economic Cooperation forum meetings at the Thai resort of Phuket.
In Tokyo, Snow will face a conundrum that recent US treasury secretaries have been unable to adequately answer: should he gently prod, or try to shock Japanese leaders into drastic action to revive a debt-mired economy?
In a major policy speech in June, Snow signaled that he would be patient, gently comparing Japan’s current malaise with the sluggish US economy of the 70s, and recalling how US managers looked to Japanese firms for lessons in how to beat stagnation.
In China, Snow will be forced to confront fears that a massive trade gap and a weak yuan will spark a destabilizing trade war with the potential to cloud warming Sino-US relations.
China’s handling of its economy has subjected the Bush administration to fierce domestic pressure — which will only rise as election year 2004 approaches.
