Is Paulson in China's pocket?

China-bashers join ranks with climate skeptics attacking Bush's Treasury pick.

Published June 1, 2006 11:40PM (EDT)

You would think that a Republican who ran one of the most profitable businesses on Wall Street would be a slam dunk for treasury secretary. But even though Goldman Sachs CEO Hank Paulson will most likely be confirmed by the Senate, he may get a few bruises along the way.

The environmental blogs have been quick to note that the global-warming skeptics and free-market think tanks were immediately up in arms about Paulson, who moonlights as board chair of the Nature Conservancy. (For a detailed look at Paulson the environmentalist, see Amanda Griscom Little's article in today's Salon.) But that isn't the only flank on which he's taking fire. Forget about his suspect views on climate change; the man is so hip deep in China he's practically a traitor!

Or so implies William R. Hawkins, writing for an outfit called American Economic Alert, a publication of the U.S. Business and Industry Council.

"Goldman Sachs is not just in bed with the Beijing regime, they've married and raised a family," writes Hawkins.

China's president, Hu Jintao, "was undoubtedly happy to hear of Paulson's nomination. Goldman Sachs works to facilitate foreign investment in Chinese industry, and thus to help Beijing become a more formidable rival to the United States. It claims to have helped raise more international equity for Chinese firms (including state enterprises) than any other international investment bank, and to be the only international bank to have participated as a lead underwriter in every sovereign debt program of the Chinese government. Goldman Sachs is also buying for itself stakes in several Chinese banks."

From Hawkins' perspective, Goldman Sachs has been front and center in contributing to the rise of a military superpower whose ultimate interests are at odds with those of the United States. Although the U.S. Business and Industry Council usually confines itself to railing about the loss of jobs and the hollowing out of the U.S. manufacturing industry as a result of globalization, this time around it is playing the patriotism card. Never mind that there is probably no better way to ensure that China does become hostile to the United States than to treat any engagement with it as tantamount to getting under the covers with the enemy.

Of all the many reasons to look closely at globalization and the U.S.-Chinese relationship, the red-baiting charge that businesses who invest in China are selling future American military superiority down the river is the stupidest. If our goal is to ensure that the rest of the world hates and distrusts us, we've already done a fine job of that. But alienating a nation that will become a world superpower whether we help it or not is just bad foreign policy. The prospect of a rich and prosperous China is something American manufacturers should be looking forward to, not fearing. The faster the country moves out of its current low-wage superstar status into a middle-class consuming powerhouse, the faster there will be opportunities for everyone to prosper.

With China-bashers and global-warming skeptics both lining up to take whacks at Paulson, it's hard not to cheer him on.

By Andrew Leonard

Andrew Leonard is a staff writer at Salon. On Twitter, @koxinga21.

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China Environment Global Warming Globalization Goldman Sachs How The World Works Wall Street