Although Paulson talks frequently to Janet Yellen, today’s U.S. Treasury secretary, and Jeff Zients, Joe Biden’s chief of staff, he tends to turn down interviews. “As someone who sat in the seat and had people shoot at you from the outside, I know what it’s like,” he says. He has decided to make an exception today because there are things he wants to say. These boil down to two themes: the dangerous state of U.S.-China relations, and the fragility of America and Europe’s financial systems.
I ask who is to blame. “What we’re seeing right now is Biden waiting to have a sorely needed call with Xi and meanwhile Xi’s everything-but-America strategy is a whirlwind of activity,” Paulson says. “Xi is playing the global statesman, meeting with heads of state around the world and in China. The Chinese are arguing that the U.S. is trying to contain them and the Chinese people definitely believe that.
Paulson caused a stir earlier this year when he wrote an essay in Foreign Affairs magazine with the headline “America’s China policy is not working.” Along with just a handful of other senior U.S. statesmen — notably Henry Kissinger, who will turn 100 next month, and Michael Bloomberg, the former mayor of New York, who is 81 — Paulson is going against the grain of America’s hawkish consensus. Perhaps that is why he is pressing his point so hard.
“I never defend the actions I’ve seen China has taken. I abhor them,” Paulson says. “But what I say is we need to be smart and tough and do things in a realistic way that will work. I am interested in results. Our ‘One China policy’ has served us very well over the years and it’s very important that we stick to it. If we stick to One China and have a deterrent in the region, war is not inevitable.”Article contentWe have long since abandoned the one salad policy. Our separate main courses arrive.
So more regional banks will go under as depositors flee? “I’ve been around long enough to not predict anything. There is uncertainty and more to come.”
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