Warning of job losses, inadequate basic research, poor primary schooling and an exploding budget deficit, the woman who negotiated China's entry to the World Trade Organization two years ago gave a surprisingly pessimistic speech about US economic prospects on Tuesday.
"The US underperformed from 2000 -2003. This was a period when the US saw three successive years of job losses, the first time since the Great Depression of the 1930s," Barshefsky said at the 37th Pacific Basin Economic Council meeting in Beijing
In contrast, she cited the growing trade power of China, which overtook the US last year as the biggest export market for Korea and Japan.
China also recently overtook Japan as the biggest exporter by value to the US market, and could conceivably overtake the US as the world's biggest import market as early as 2007.
Yet when asked by members of the audience whether this meant it was time for the US to protect itself by via tariffs and similar protectionist measures, Barshefsky said no.
"I don't believe it's right to be afraid of smart people,"she said, adding that the trade framework of the last 50 years had contributed enormously to the explosion of global wealth.
Even when members of the audience pointed out that the region had accumulated around $1 trillion in foreign reserves partly as a by-product of keeping their currencies artificially low, Barshefsky would not be drawn, other than to comment that the US and other countries did not have spotless records when it came to policy.
Her low-key and tactful comments come as a complete contrast to those carried in China's papers today.
Long Yongtu, her former opponent during China's negotiations to the WTO, adopted quite a different tone when discussing the controversy surrounding China's status as a 'market economy'.
China is keen to be awarded official recognition of market economy status because it would mean countries can't accuse it of dumping goods at below market price.
China is currently the target of a great deal of such litigation.
The European Union administered a blow to this hope when it declined to recognize China as a market economy last week.
A combative Long suggested that given China's growth and potential, whether or not China was a market economy was an internal decision for China, not a matter of waiting for other countries to acknowledge it.
The remark smacks of hubris or perhaps simply a matter of saving China's face. However, it's also true Long has come under huge pressure from China's private sector for creating a 'one-way street' of benefits in favour of foreigners in key service areas such as insurance and telecommunications. It's therefore likely he wants to assert his credentials as a patriot.
It's perhaps in order to avoid pouring oil on the flames that the ambassador took the opposite approach of emphasizing US weakness rather than US strength.
The gist of her message may have come right at the end of her speech when she said it was very important for China to ensure it implanted WTO rules in order to give Americans the feeling that they were not being treated unfairly.
"It's true that avoiding WTO implementation, noticeably in certain service sectors and agriculture, is a breeding ground for resentment," she pointed out.
She added that one reason for China's unpopularity in some parts of the US was the high visibility of the light industrial products China exports in such quantities.
It is workers in this area in the US who tend to be low paid and especially vulnerable to lay-offs she remarked.
However, Barshefsky was careful to emphasize that in manufacturing, for example, 80% of job reductions came as a result of sharp increases in productivity, not because of goods from China.
Referring to China's desire for the status of a market economy she said that China would be exposed to a huge number of lawsuits if it obtained it.
"China would immediately be sued by US companies for receiving unfair subsidies," she pointed out.
As a non-market economy, China is currently immune from that charge, since it is accepted that subsidies exist in non-market economies, although non-market economies can be sued for dumping.
China's status as a non-market economy is quite controversial. While Barshefsky said that many parts of the economy were as free or more free than the emerging Eastern European economies of Hungary and Poland, some facets of China economy make her bid to win market economy status unrealistic. For example, the government still controls the prices of such key commodities as water, electricity and land, thereby benefiting local companies.
Barshefsky concluded that it was important for the major economies of Asia, whose large current account surpluses are the mirror image of the US' deficits, to work closely together to minimize friction.
"China is adopting the export-led model, just as its North Asian neighbours have done in the past. It's a model that works, that produces economic growth, but it's also a model that creates a lot of friction,"she said.
Numerous members of the forum commented on the under-representation of the Asian economies in organizations such as the G8, the United Nations security council, and the International Monetary Foundation.
Barshefsky suggested that invigorating the Asia Pacific Economic Council would be a good forum for closer links.
