Snow Falls Silent in China

Unless China acts on revaluation after this trip by administration officials, and that looks unlikely, manufacturers will not view this trip as a success and calls for protectionist measures by congress will likely intensify:

Snow Shifts His Demands on China By Edmund L. Andrews, NY Times: For two years, Treasury Secretary John W. Snow has pushed and prodded China to let its currency float more freely. On Monday, he declared his satisfaction and changed the subject. After a week of meetings from Shanghai to Beijing, Mr. Snow buried his specific demands for the yuan beneath a broader call for China to overhaul its system of banking and investment. ... "We are here to encourage the progress, to support the progress," he said on Monday. "Moving toward a truly flexible exchange rate regime requires quite a large number of steps," he added. "We recognize that will take some time." That was a far cry from what American manufacturers had wanted ... Mr. Snow all but ruled out the possibility that he would accuse China of currency manipulation when he reports to Congress in early November. ...  If Mr. Snow's week showed anything, it was that American officials have learned the limitations of pressuring Chinese leaders from outside.

Update: Interestingly, this editorial from the Wall Street Journal endorses the creation of social insurance programs in China (see Brad Setser for more on this) and China's efforts to intervene in currency markets and maintain a stable yuan:

Kibitzers in Beijing, Editorial, Wall Street Journal: It requires some audacity to tell another country how to run economic policy, but at least a high-level American delegation in Beijing is giving China some good advice, along with the bad, for a change. Although still fronting for protectionists in the U.S. Congress, Treasury Secretary John Snow and his entourage have become more constructive. To be sure, the administration still shows little sign of embracing the benefits that a stable yuan continue to bring, for both China and the global economy. ... Treasury Undersecretary for International Affairs Tim Adams told us that the currency issue was just one issue in a "three-pronged approach." The administration is now pushing China to ... focus more on domestic consumption and allow foreign companies help develop a more sophisticated financial-services industry. As Mr. Adams notes, the two goals are closely linked. A key factor behind China's high savings rate is the need to set aside funds to finance health care and retirement in the absence of an effective social security or private pension system. Developing financial instruments that allow Chinese to insure against these risks ... would obviate the need for such a high level of precautionary savings. ... China is remarkable among developing countries for its openness, in terms of both exports and imports and, however its economy develops in future, a stable yuan will continue to offer immense benefits not just to China but to its global trading partners. Mr. Snow's recognition that there are other issues besides China's currency is a step in the right direction. Perhaps in time it will allow Washington's yuan fixation to quietly fade into the background.