Remember a few weeks ago when new U.S. Treasury Secretary Tim Geithner accused China of manipulating its currency?

He was smacked around quite liberally in the press and of course by Beijing, and he’s been backpedaling ever since on China policy.

I wonder who it was that yelled at him, ensuring that he would play nice in the future when it came to China policy. Whoever it was, it appears to have worked.

Here’s the latest episode in the new hit reality show "Geithner loves China":

Treasury Secretary Timothy Geithner pushed Group of Seven officials to soften criticism of China last month after his accusation that the nation was “manipulating” the yuan strained ties with the U.S.’s second- biggest trading partner, said a person briefed on the matter.

Geithner’s behind-the-scenes effort came just weeks after he publicly accused China of “manipulating” its currency during his Senate confirmation hearings, drawing criticism from the Chinese. Donald Straszheim, a former Merrill Lynch & Co. chief economist, said the G-7 shift may signal the U.S. Treasury won’t label China a manipulator in a report due April.

“I would be very surprised if we would bring up the currency manipulator terminology again any time soon,” said Straszhiem, who heads Straszheim Global Advisors Inc. in Los Angeles. “I think it would be a mistake and I don’t think they’ll do that.”

I don’t either. Geithner has enough to worry about (and few friends to speak of these days) without pissing off China again.

This does afford me a tiny "I told you so" moment. When it became clear that Obama was going to become president, and all of us blogoids were discussing what sort of China policy he might bring to the table, I believe I mentioned my worry that he would make some of the same mistakes as Clinton*.

If you recall, Clinton tried to play it tough against Beijing for a year or so, and then backed down to follow the same policy the U.S. has had since the 1970s.

Geithner started out tough but backed down in a hurry. The initial comment shouldn’t have happened at all, but I applaud the speed of the reversal. Unfortunately, now Geithner will be seen as hostile to China no matter what he says from now on. Hard to live down this sort of thing.
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* I refer to Bill (not Hillary) Clinton, of course, who was President of the United States from 1992 to 2000. You remember, back when there were jobs, credit, etc.