As prepared for delivery
WASHINGTON – On behalf of President Obama and my U.S. colleagues, I would like to welcome Vice Premier Wang and your colleagues from across China’s government to the Treasury Department, and officially open this year’s S&ED Economic Track meetings.
Both of our countries are managing new challenges and seeking to reach new opportunities. We have an enormous stake in each other’s economic success. And we each have a strong interest and a joint responsibility to foster a constructive bilateral relationship and to pursue policies that support the global economy, ensure a level playing field for our firms and workers and uphold the global economic and financial architecture.
Our task here is clear. The United States and China must work together to ensure an international economic and financial environment that is conducive to sustained, job-rich, and inclusive growth. Essential to this task are the close ties we have established between American and Chinese officials at all levels. Our frank communication and frequent exchanges have helped us better understand each other’s thinking, challenges, and goals. Through these channels, we are working to create economic opportunities for the citizens and firms of both our countries, dealing with real and potential frictions head on, and working together to address global challenges that are important not only to our two countries but also the rest of the world.
For the United States, we are committed to creating jobs, achieving fiscal sustainability, and investing to promote future income growth. I look forward to speaking with you and your colleagues about the progress we have already made, and how we plan to build on this progress going forward.
China’s current reform push is ambitious. It would — if fully implemented — substantially support China’s economic rebalancing and put it on a more sustainable growth path. But just as this crucial reform stage is taking place, China’s growth is slowing due to a number of factors. At the same time, the economy is undergoing an important transition to a new growth model that is structured around domestic consumption — rather than investment and exports. I am interested to hear your views on balancing the goals of maintaining short-term growth while pressing forward with these crucial reforms, keeping in mind that full implementation of reforms is ultimately necessary to maintain growth over the longer term.
China’s success in sustaining growth and reaching its next stage of development will matter greatly not only for China, but also the United States and for the global economy. And there is a substantial overlap between what we have been urging China to do and the reform path that China is currently undertaking.
Further exchange rate reform, complemented by measures to increase the transparency of China’s reserve holdings and foreign exchange market operations, are at the crux of achieving the shift toward consumption-led growth. China’s exchange rate intervention has declined significantly since the last S&ED, although the real test will come when the market again pushes for RMB appreciation against the dollar. It is critical that China continue to move to a more market-determined exchange rate and a more transparent exchange rate policy.
Another critical piece of this agenda is the continued reform and development of the financial sector, in order to increase its capacity to provide financing to the new, small, and private enterprises that will drive future growth. China has made progress by giving banks more flexibility in setting savings rates and introducing a deposit insurance system, and has taken steps to increase cross-border financial flows. But further domestic financial sector reforms and interest rate liberalization are needed, as well as prudent steps to liberalize China’s capital account and promote greater integration with international financial markets. Providing foreign financial institutions with greater access will promote capital market development, as well as promote competition and efficiency, increase funding available to innovative firms, and boost households’ access to a broader range of financial products.
Opening the Chinese economy to greater foreign investment and strengthening the protection of intellectual property rights and trade secrets is also important to boost productivity growth and promote innovation. It is in our common interest to continue to break down barriers to trade and investment, maintain open markets, promote regulatory transparency, and protect our workers and the environment by setting high standards. We will have candid discussions on the importance of non-discriminatory technology policies and open trade in information and communications technology goods.
On cyberspace, in particular, we remain deeply concerned about Chinese government-sponsored cyber-enabled theft of confidential business information and proprietary technology from U.S. companies. Such activity falls outside of the bounds of acceptable state behavior in cyberspace. A more open, secure, interoperable and reliable cyberspace is critical to free and fair commerce and we look forward to discussing these matters further.
We will also discuss how to make further progress in the Bilateral Investment Treaty negotiations, and how to ensure continued support among stakeholders for this process.
Both our nations also have a strong stake in the international financial architecture, and we believe China should work with us to maintain and advance high standards in international financial institutions as we address the challenges of the 21st century, including in such areas as climate change and development finance.
Our meetings over the next two days will provide an important opportunity to have candid discussions on how we can continue to build a more sustainable and balanced economic relationship. I also look forward to laying the groundwork for further progress in the U.S.-China relationship at the meeting of our two Presidents in September.
Again, I welcome you and we look forward to a candid exchange of views.
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