Interesting report from Reuters, which has obtained some new Wikileaks cables purporting to show China using its financial muscle to influence Treasury policy.
Unfortunately we haven’t seen the cables yet themselves, but here’s the nut from Reuters:
The cables, obtained by WikiLeaks, show that escalating Chinese pressure prompted a procession of soothing visits from the U.S.Treasury Department. In one striking instance, a top Chinese money manager directly asked U.S. Treasury Secretary Timothy Geithner for a favour.
In June, 2009, the head of China’s powerful sovereign wealth fund met with Geithner and requested that he lean on regulators at the U.S. Federal Reserve to speed up the approval of its $1.2 billion investment in Morgan Stanley, according to the cables, which were provided to Reuters by a third party.
Although the cables do not mention if Geithner took any action, China’s deal to buy Morgan Stanley shares was announced the very next day.
We’re a little sceptical that this is as big of a deal as it sounds, but we’ll formulate that in a moment.