Paulson's China Charm Offensive

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Though China has conceded it has work to do, Beijing regulators have in turn gone after U.S. companies that have alleged problems as well. Imported American poultry and pork products from several major U.S. producers such as Cargill, Tyson Foods (TSN), and Sanderson Farms (SAFM) have been suspended over charges they are unsafe from use of pesticides and drugs, or infected with bacteria.

Fakes and Knockoffs

Counterfeiting and intellectual-property rights abuses in China continue to be a hot-button issue, and have featured prominently in discussions in Washington and Beijing during so-called "strategic economic dialogue" talks between Paulson and Chinese leaders such as Vice-Premier Wu Yi. The local economic interests tied to fake goods and lax regulatory oversight is a long-range problem and is costing U.S. and global businesses billions in lost revenues.

It's true that earlier this month, the FBI and China's Public Security Bureau busted up a pirating syndicate that had been peddling bootleg versions of Microsoft (MSFT) software. However, piracy of music and other U.S. products remains a scourge without any signs of quick resolution.

Good Cop, Bad Cop

While Paulson's charm offensive with Chinese officials continues apace, the Commerce Dept. is playing a far rougher game. Commerce currently has 62 anti-dumping orders on Chinese imports ranging from consumer goods to steel products and chemicals. "These orders represent 27% of the total anti-dumping orders we currently have in effect globally and cover almost $6 billion in imports," David Spooner, Assistant Secretary of Commerce for Import Administration, told a congressional committee on July 25.

Add it all up, and Paulson's early record is somewhat mixed. While the Treasury Secretary gets high marks for his commitment, his inside knowledge of the ways of Beijing, and his sterling contacts, he will ultimately be judged by improvements in trade and piracy. This doubtless will be one of the toughest acts in international financial diplomacy to pull off effectively.

Bremner is Asia Regional Editor for BusinessWeek in Hong Kong.