Posts Tagged ‘Secretary of the Treasury’

Media Note

Office of the Spokesman
Washington, DC
May 25, 2011

Below is the text of a letter from Secretary of State Hillary Rodham Clinton and Secretary of the Treasury Timothy F. Geithner to their G8 Minister counterparts:

Begin text:

Dear G8 Colleagues,

As President Obama said on May 19, the courage of the people of the Middle East and North Africa has created a historic opportunity. This is a time for the region and the world to work together to support successful transitions toward democratic societies and more inclusive economies.

As our nations gather at Deauville, we should consider several steps to support these goals. We share a compelling interest in seeing the transitions in Egypt and Tunisia succeed and become models for the region. Otherwise, we risk losing this moment of opportunity.

Experience from other democratic transitions has taught us that we should focus on trade, not just aid, and on investment, not just assistance. Moreover, our efforts should be aligned with the needs and aspirations of the people of the region. In Egypt and Tunisia, citizens have outlined several key priorities: improving financial stability, strengthening the private sector, curbing corruption, creating jobs, and further integrating their markets with the region and the global economy.

With these priorities in mind, we should first offer our strong support for the Joint Action Plan of the Multilateral Development Banks. The World Bank and the African Development Bank will bring their resources to bear by supporting home-grown policies and reform agendas. We call on governments around the world—including in the Middle East and the Gulf—to join us in forming a broad and long-term partnership to support Egypt and Tunisia. It will be important to ensure that public dollars help leverage private dollars and grow private enterprise, and that the reforms are driven by the people and leaders of the region themselves.

Second, we should help Egypt convert the debts of the past into investments for the future. The United States is committed to a debt swap for Egypt and we are asking our partners to join us in this initiative. A debt swap will enable Egypt to channel its debt payments toward underwriting swift, sustainable job creation. A shared response in the form of a multi-creditor debt swap for job creation would provide Egypt with financial relief while also ensuring that critical investments are made to improve the lives of Egyptian people. We also should stand ready in the Paris Club to reinforce the forthcoming IMF package for Egypt. At the same time, we should collectively commit to helping newly democratic governments recover assets that were stolen.

Third, the G-8 should lead efforts to reorient the European Bank for Reconstruction and Development (EBRD) so that it can play the same role today in supporting democratic transitions in the Middle East and North Africa that it has played over the past two decades in Central and Eastern Europe. Our countries should use the Deauville Summit to support a mechanism that enables the EBRD to engage in the near-term to support private sector development in the region, as well as reforms that create conditions for successful entrepreneurship.

These immediate steps will provide important support to the democratic transitions already underway. But to be most effective, they must be part of a larger vision that connects the region to the global economy.

Non-oil exports within the Middle East and North Africa currently account for less than 10 percent of the region’s total trade— lower than that of any other region in the world. This lack of regional integration has contributed to chronic unemployment and hindered diversification.

To begin reversing this trend, President Obama announced a comprehensive Trade and Investment Partnership Initiative in the Middle East and North Africa. We ask members of the G-8 and the EU to join the United States and other willing partners across the region to facilitate more trade within the region, as well as between the region and global markets. This plan will increase market access and create new economic opportunities in new sectors, driven by new technologies. Just as membership in the European Union served as a powerful incentive for economic transformation in Central and Eastern Europe after the Cold War, so should the prospect of participating in an integrated and dynamic regional economy create a powerful force for reform in the Middle East and North Africa.

As President Obama said, the greatest untapped resource in the Middle East and North Africa is the talent of its people. Ultimately, they are the ones who will determine the future of their region. The nations of the G-8 share an interest and a responsibility in supporting these people and their countries as they move toward genuine democracy and more vibrant and open economies. The proposals we have outlined are important steps toward that future and we should waste no time in seizing this moment of opportunity. We look forward to working with you in translating these proposals into results.

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Q&A with Secretary of the Treasury Timothy Geithner in Beijing

Hillary Rodham Clinton
Secretary of State
Beijing, China
May 25, 2010

MODERATOR: Hi, everybody. Since the Secretary just gave statements at her previous events, we’ll go right to questions, starting with Mike Landler of the New York Times.

QUESTION: Good afternoon. Madam Secretary, what specific steps or measures did the Chinese agree to in terms of an international response to North Korea over the sinking of the South Korean warship? And does China’s apparent neutrality in this matter raise concerns with you about the role China is playing in regional security? Thank you.

SECRETARY CLINTON: Well, Mark, let me start by saying that we had very productive and detailed discussions about North Korea starting on Sunday night and going through today. The Chinese understand the gravity of this situation. And Premier Wen will be traveling to the Republic of Korea on Friday to consult with President Lee. Both Premier Wen and President Hu Jintao expressed their deep regrets over the loss of life that came from this incident, the sinking of the Cheonan naval vessel. We pledged to stay in very close consultation. I told them I was going to South Korea tomorrow for consultations with both President Lee and Foreign Minster Yu. And we will be reporting to the Chinese the results of our consultations and then we will be discussing with them the results of Premier Wen’s visit on Friday.

We expect to be working together with China in responding to North Korea’s provocative action, and promoting stability in the region. I think it is absolutely clear that China not only values but is very committed to regional stability, and it shares with us the goal of a denuclearized Korean Peninsula and a period of careful consideration in order to determine the best way forward in dealing with North Korea as a result of this latest incident.

I believe that President Lee has conducted himself in a very statesmanlike manner and he has put forth very prudent measures that he hopes the international community will pursue. And I look forward to consulting with both the Republic of Korea and China in the days ahead.

MODERATOR: The next question will be from Glenn Somerville of Reuters.

QUESTION: Secretary Geithner, in your closing statement, you said that U.S. and China have agreed to support the financial reforms and the financial efforts that Europe is making to restore stability. What exactly does that mean? And how might the U.S. and China act to offer that support?

SECRETARY GEITHNER: Through the IMF. Obviously, the developments in Europe were part of our conversations over the last several days. But I think you see in China and the United States very encouraging signs of stronger growth, recovery that’s more broad-based – led, of course, by the private sector in the United States. And in China, you’re seeing it translate – you’re seeing it come with a substantial shift in the composition of growth towards growth led by domestic demand. And I think that’s very important to point out because, again, we come to this stage in recovery with a world economy that is in a much stronger position than it was three months ago, six months ago, nine months ago.

But of course, we both have – China and the United States have a strong interest in seeing Europe put in place this very strong program of economic reforms and financial support. And of course, as I like to say all the time, it’s important to understand that Europe has the capacity to manage these challenges. And we’re confident they will.

MODERATOR: The next question is from Matt Lee of the Associated Press, here in the front row.

QUESTION: Well, this is a question for Secretary Clinton. First, I’d like to thank you for mentioning the Buffalo Bills the other day in your speech, in your talks and discussions in Shanghai. (Laughter.)

Secondly, along the lines of Mark’s question but with a differing country, I’m wondering how much, if any, progress you’ve made in dealing with the Chinese on the annexes to the Security Council resolution on Iran and how big a problem naming names in those annexes is toward them, particularly with the amount of investment that they have in Iran. Thank you.

SECRETARY CLINTON: Well, Matt, I was delighted to mention that the first Chinese recruit for the NFL will be going to the Buffalo Bills. And that means a lot to some of us because we’re big Buffalo fans, and so happy to shill for you anytime, Matt.

With respect to Iran, we are pleased with the cooperation that we’ve received. We have a P-5+1 consensus, as you know, on the text of a resolution. We’ve had productive discussions on completing the annexes and proceeding to the Security Council with the resolution and annexes. And we discussed at some length the shortcomings of the recent proposal put forward by Iran in its letter to the IAEA. There are a number of deficiencies with it that do not answer the concerns of the international community. There is no recognition of the deep concern people have because of the 20 percent enrichment that Iran is pursuing. There is a recognition on the part of the international community that the agreement that was reached in Tehran a week ago between Iran and Brazil and Turkey only occurred because the Security Council was on the brink of publicly releasing the text of the resolution that we have been negotiating for many weeks. It was a transparent ploy to avoid Security Council action.

And there is a clear choice which Iran faces. It’s been the same choice that it has faced since the Obama Administration undertook its dual-track approach of engaging with Iran and holding in abeyance international pressure. And we are still on a dual track, but we have moved our diplomacy from the P-5+1 context to the Security Council. The Security Council bears the responsibility of enforcing its own resolutions, which have been violated continuously by the Iranians.

And the Security Council has a very clear path forward, which is not the end of diplomacy but, in fact, it is in accordance with the dual track, the addition of international pressure to obtain real results from the Iranians with respect to their nuclear program. There’s a standing invitation from the P-5+1 to begin that discussion about the Iranian nuclear program that has yet to be accepted by the Iranians. So we discussed all of this in great detail with our Chinese friends and we are moving forward to hold Iran accountable.

MODERATOR: The next question is from Rebecca Christie of Bloomberg.

QUESTION: Thanks very much. Mr. Secretary, what is the timeline for when you will need to say something about the foreign exchange report to the Congress? You are required to submit – the Treasury Department is required to submit this report by law. You’ve delayed it by three months. What do you need to say and when?

SECRETARY GEITHNER: That time will come. But Rebecca, I think it’s important to emphasize that we came – we come to this relationship with three very important objectives. One is to see a growing economy in China with growth coming from domestic demand, stronger household income, stronger consumption. Second is to make sure that we’re making progress in making sure that American exporters, American companies operating in China are able to compete on a level playing field. And of course, we want to see China continue on the broad path of reform of its exchange rate system.

And again, it is important to note that what China has undertaken just in this past year has been remarkable. And you’re seeing very substantial increase in economic opportunities for U.S. firms in China, very rapid growth in American exports to China. That’s very important to us, it’s obviously very beneficial to China, and it will make a very important contribution to strengthening this global recovery.

MODERATOR: We have two questions from Chinese friends. The first is Leo Chan from Xinhua.

QUESTION: Okay. First of all, congratulations on the successful conclusion of the Strategic and the Economic Dialogues. And thank you for including – Secretary Clinton, questions for you and the – Secretary Geithner.

So my question is although we never – we should never evaluate the dialogue based on its many accomplishment – agreements to have signed or breakthroughs we have cracked open or the compromises we have made. I want to ask – what we want to know is that – what does the Obama Administration plan to take – what kind of substantial measures or steps the Obama Administration plan to take to implement or carry out the – what we have agreed here during past two days? Thank you very much.

SECRETARY CLINTON: That’s an excellent question, because it is important that we report to the press and through the press to the public, in both China and the United States, about the results of these intensive negotiations. A lot of work goes into them before we ever show up. Secretary Geithner and I have the benefit of a wonderful team of people in both the Treasury Department and the State Department who work with the entire United States Government in order to prepare for these dialogues. And of course, on the Chinese side, the same is true with our counterparts, Vice Premier Wen and State Councilor Dai.

So here are some of the things – and we will prepare a more thorough accounting of the results of the dialogue – but let me put it into three, sort of, categories. One, the high-level discussions that I engaged in on the strategic track and that Secretary Geithner engaged in on the economic track build an enormous amount of understanding and create an environment in which both the United States and China are able to better appreciate the other’s point of view, to work through in an open, candid manner the problems that we are going to encounter, because we’re not going to agree on everything. No two countries possibly could.

And as I said in my statement over at the Great Hall of the People, we got through some rocky periods this past year, I would argue, in part because of the good relationship between President Hu Jintao and President Obama, but also because of the relationship that went down from our presidents into our governments that has been developed over the last 15 months through the Strategic and Economic Dialogue. So it’s intangible, but understanding confidence, trust is a very big result of what we are doing.

Secondly, there are some long-term problems that we are tackling. Many of the issues that we are addressing are in the headlines. You just heard questions about some of them – North Korea and Iran, currency. Those are in the headlines. And we want the people of both of our countries to know that we’re working together, we are taking action together, and we are attempting to deal with global and regional instability on either the economic or the security and strategic front. So each of those difficult problems is being given an enormous amount of attention.

But finally, there is so much more work that’s going on every single day because of these dialogues. Those of you who saw the signing ceremonies saw a number of memoranda of understandings signed. Each of those represents months of work and consultation between our respective governments. I mentioned one of them, the first time ever that American experts and Chinese experts will work to develop China’s natural gas resources. Imagine what it would mean for China if China unleashed its own natural gas resources so you are not dependent on foreign oil, particularly from such a difficult area as Iran.

So working together to try to enhance China’s energy independence is not something that’s going to happen next week or maybe even not next year. But the process that we are doing together is a very strong example of our long-term commitment to each other. Similarly, the agreement today to send a hundred thousand more American students to China over the next four years to study Mandarin, to learn more about your country, is a very tangible result of the dialogue. We want to build people-to-people connections and more exchanges at all levels of society.

So we will give you a full accounting with all of the health agreements and the education agreements, the customs agreements, the energy agreements, the science and technology agreements. There’s a very long list. Some of them will have immediate impact and benefits, some in the medium-term, and some are long-term investments that come out of our long-term commitment to the relationship.

MODERATOR: And the final question will come from John (inaudible) of The Economic Observer.

QUESTION: My question is to you, Secretary Geithner. And U.S. side of press are very hard to Chinese to make sure that U.S. ventures can enjoy the equal opportunities to business in Chinese national and make some progress in the GPA issues. I want to know will U.S. improve its policies to make sure Chinese companies investing U.S. and (inaudible) equal opportunities?

The second question is that – the spreading European debt crisis could – U.S. public financial situation again in the spotlight. What did you tell your largest debt holders that they can assure that they are – U.S. (inaudible) is safe? Thank you.

SECRETARY GEITHNER: The answer to your first question is yes. But I want to underscore the point you began with, which is to say that our colleagues – Ambassador Kirk, Secretary Locke, Minister Chen – worked very hard to make some changes, important changes to China’s announced policies to promote indigenous innovation in response to the concerns raised by the American side and by businesses in many other countries as well. And they agreed to a set of very important, clear principles – principles of nondiscrimination – and they agreed on a very carefully designed, detailed process that’ll bring all the right people to the table over the next few weeks and months to see if we can make further progress in the months ahead.

Again, this is very important, because just as China wants to face growing opportunities in the U.S. market, American firms – and we want to be able to demonstrate confidence that American firms are going to face a level playing field with expanding opportunities in the Chinese market – and I think what my – or our colleagues accomplished in these last few weeks is much – is a very important, positive set of principles and a process for moving forward to build on the changes China’s already made to try to be responsive to these concerns.

On your second question, my – our Chinese counterparts have a very sophisticated understanding of the framework we’ve put in place as our economy recovers to bring our fiscal position back to a more sustainable level. And I want to underscore the following: If you watched the arc of this crisis over the last 15 months or so, at times when the world was most worried about financial stability, most worried about the path of economic growth and activity, investors around the world sought the safety and security and liquidity of U.S. financial assets. And you saw – and you still see it now – anytime you see a measure of caution reintroduced into markets, you see investors still looking for the basic safety and liquidity those markets offer the world.

And that is a sign of confidence that the United States, as it has in the past, will move with care and force and effectiveness to address the challenges we face. And you see us moving now. Look how quickly we moved to try to repair the damage in our financial system, to strengthen the basic financial position of U.S. financial institutions, to lay out a framework of very comprehensive financial reforms to try to make sure we’re creating a more resilient U.S. financial system, and to try to make sure that the U.S. will be a source of growth and stability to the global economy in the months ahead and the years ahead.

MODERATOR: Thank you all.


SECRETARY GEITHNER: Thank you very much.

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I just have to add: I love her face any which way, but this look is one of her cutest.

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Joint Press Availability With Secretary of the Treasury Timothy Geithner

Press Availability

Hillary Rodham Clinton
Secretary of State
Secretary of the Treasury Timothy Geithner
Eisenhower Executive Office Building
Washington, DC
July 28, 2009

Video Link

MR. KELLY: Can I ask you to take your seats, please? If we could have your attention, Secretary Clinton and Secretary Geithner will take a few questions once we’re all settled. And the first question will go to Deb Solomon from The Wall Street Journal. QUESTION: Secretary Geithner —
MR. KELLY: Can you speak up?
QUESTION: How concerned are you about China’s focus on the U.S. budget deficit, and what types of assurances did you give them about our efforts here to bring it down?
SECRETARY GEITHNER: Not concerned. In fact, we’re in a very similar place. Again, in the face of this acute crisis we saw around the world sweep around the world last year, we have both put in place very powerful support for private demand recovery-type programs like you saw in the United States. China has done a very similar type approach. Our central banks have moved very aggressively to provide support, providing liquidity to markets.
That basic strategy, I think we agree, is the necessary path to recovery. But China, like the United States, understands that as we see recovery take hold, we’re going to need to reverse those exceptional actions. And so as China will do, we in the United States will move to bring our fiscal deficits down over the medium term, and we will work to reverse the other exceptional actions we’ve had to take to stabilize the crisis. I think we’re in a very similar position, shared strategy, much more in common than what separates on – us on broad strategy.
QUESTION: Can I follow up on that?
MR. KELLY: (Inaudible) from AFP.
QUESTION: Hi, Secretary Clinton. Both you and the President mentioned human rights as an area of some difference between the United States and China. I wondered how much – how integral human rights are to the Strategic Dialogue and what you actually talked about in the discussion, and specifically if you talked about the situation in Xinjiang.
SECRETARY CLINTON: Human rights is absolutely integral to the Strategic and Economic Dialogue. It is a part of our policy not only with China but with other countries. It’s bilateral as well as multilateral. We discussed a number of human rights issues, including the situation in Xinjiang, and we expressed our concerns. We obviously had some very good exchanges between ourselves and the Chinese about their perspective and ours, but it was certainly a matter of great interest and focus.
MR. KELLY: (Inaudible) Xinhua.
QUESTION: Secretary Geithner, I noticed that U.S. agreed to take consideration on the influence of its monetary policy. Could you elaborate just a little bit? And how do you comment on the specific outcome of this dialogue? Thank you.
SECRETARY GEITHNER: I think the most important thing we achieved today was to agree on this broad framework for policies and reform, both China and the United States, to help lay the foundation for a more sustainable, more balanced global recovery. We want to be very careful, as we work together to help move the economy – global economy – back from crisis to growth, that we don’t lay the seeds of future crises.
So as part of that – again, this is the critical thing – that as we move to raise private savings in the United States, as we move to bring down our fiscal deficit in the future, as we move to put in place a more stable, more resilient financial system in the United States, we need to see actions in China and in other countries to shift the source of growth more to domestic demand. Those are necessary complements; they have to work together. And I think that’s the most important strategic achievement here, and it’s critically important to the rest of the world. It’s not something that China and the U.S. can do on their own, but unless we do it, it won’t be possible for the rest of the world as well. So I’d emphasize that.
Now, of course, we both recognize that the policies we undertake in our own countries have big effects, significant effects, on the rest of the world. And we take the responsibilities that come with our role in the world very, very seriously. And we – this President of the United States, working with the Congress – will work very hard to make sure we build a stronger economy, a more productive economy, in the future. And then, as he said, once we are confident that recovery is firmly established, we will move to reverse these exceptional steps we’ve had to take to help address the crisis.
MR. KELLY: (Inaudible) Reuters.
QUESTION: Secretary Geithner, I believe you mentioned something about the U.S. savings rate going up recently. Do you think that the Chinese accept that as something that’s in the long term, that this is – that since the crisis we’ve now reached reach a point where Americans are going to be saving more? And I guess the second half of that thought is just do you believe that the Chinese will indeed buy more U.S. goods and become less reliant on the U.S. as an export market?
SECRETARY GEITHNER: I think that it’s very hard to know what the new equilibrium will be for the U.S. economy, but I think that we’re more likely to decide that these changes we’ve seen in private savings already are durable. And I think it’s more likely that you’re going to see private savings rate return to what was more typical for the U.S. economy over the preceding decades, and we’ll look back over time and view the last decade as anomalous and exceptional. That’s because I think the – we’ve learned some tough lessons as a country, and I think that the basic lesson of the importance of living within our means as both a country and as a – at the household level is an important, necessary lesson.
And I also believe that China will continue to move, as it has, to become more integrated into the world economy, more open. And as you saw them lay out today, they’ve laid out a very ambitious set of reforms to shift the sources of future growth away from the kind of heavy investment-intensive, also carbon-intensive, export-intensive sources of growth, towards an economy more reliant on services, more consumption. I think that is a necessary transformation.
And I think, again, if you look at China’s record, if you look at what China has achieved over the last 30 years, they have a remarkable record of letting out – laying out a path for ambitious reform and actually delivering on those commitments. So I think you should take these as enormously consequential objectives, not just for the United States, but for the world as a whole.
MR. KELLY: (Inaudible) CCTV.
QUESTION: Secretary Clinton, U.S. and China are two countries separated by two very different (inaudible). My question is what have you learned about China (inaudible) that you did not know previously, besides that State Councilor (inaudible)? (Laughter.)
SECRETARY CLINTON: That was pretty consequential. This has been a very rich experience the last two days. I think it’s important to build relationships between individuals as well as peoples and countries. I am very gratified by the positive commitment on the part of our Chinese counterparts to building those relationships, to achieving a level of what has been called strategic trust. And I come away from the last two days even more convinced than before we started that as open a relationship as we can achieve between the United States and China is in the best interests of both our countries and the world.
The level of sharing at a candid and deep level that we experienced over the last two days was unprecedented. And I think what you’ve heard from Secretary Geithner is that there is a lot of common ground. We are not the same. We have different histories and experiences and perspectives. We have different challenges in front of us. I mean, as Secretary Geithner said, I mean, part of our challenge is to save more and part of China’s challenge is to generate more demand for spending within the country.
But at root, I think we are pragmatic people. I think we set goals; we work to achieve those goals. I really am heartened by the positive tone of our meetings. And I think that laying this groundwork may not deliver a lot of concrete achievements immediately, but every step on this path to create confidence and understanding is a very good investment. And so what I’ve learned is that this Strategic and Economic Dialogue holds great promise.
MR. KELLY: And the last question to Mary Beth Sheridan from The Washington Post.
QUESTION: Hi, Secretary. Secretary Geithner talked about what for him was the most important thing that came out of these talks on the Economic Track, so I wondered if you could do the same on your track. And I also wondered if you specifically can talk about what came out of the conversations about the North Korean nuclear program.
SECRETARY CLINTON: One of the advantages that Secretary Geithner has is that he has very specific points to go over with his Chinese colleagues, and it’s all bilateral. Many of the hardest issues we discussed involve third parties and involve, obviously, regional and global challenges.
I would say three things. First, with respect to North Korea, State Councilor Dai has been very involved in North Korean policy in China for many years. He has a depth of understanding and appreciation for the difficulties of dealing with the North Korean Government. And we spent quite a bit of time talking in-depth about the Chinese perception both of North Korea but also of our interactions with them. And I found that very useful indeed.
I was also pleased that China shares our concerns about Iran becoming a nuclear weapons state. The potential for destabilizing the Middle East and Gulf is viewed similarly by the Chinese as it is by us if Iran, in its pursuit, triggers an arms race. And we had some very useful exchanges of information there.
And thirdly, we had many conversations in different settings on climate change and energy. And I think that the very clear description by the Chinese who were explaining what they are doing, which I’m not sure is as fully appreciated in our country as it needs to be – the kind of investments and the changes and the movement toward clean energy, and what they are willing to entertain and talk with us about – was an important step along the way toward Copenhagen.
There was much else that we discussed, but those three items come to mind.
QUESTION: Secretary Geithner —
MR. KELLY: Okay, thank you very much.
QUESTION: Six countries in six weeks, and you won’t take a question, please? (Laughter.)
SECRETARY GEITHNER: If the Secretary of State will allow me. (Laughter.)
QUESTION: Ma’am, with your gracious permission, thank you. I just wanted to ask you, we heard from Governor (inaudible) earlier saying that China would follow the United States in terms of exit strategies and withdrawing stimulus, that one of the signs that China would look for is when the U.S. starts to (inaudible). How do you address that, and is that appropriate?
SECRETARY GEITHNER: That seems about right to me. He said that in a private meeting, so that was an interesting way to say it. I think it just reflects the basic reality that in some ways we came into this earlier than anybody else. We’ve had a lot of adjustment already across the U.S. economy, so it’s more likely – largely, again, because of the strength of our policy response here – that we have a chance of emerging more quickly. And that will be a sign people look to. So that seems about right to me, I think.
Again, ultimately, we’ve got different challenges. And I’m sure the basic strategy we’ll each adopt in that context is going to be different on the fiscal and monetary policy side. Again, the basic importance of this is the recognition by both of us that things are going to have to change going forward. And if we’re going to make sure that, as I said earlier, we come out of this with a stronger foundation, a more balanced global economy, a more stable global economy, it’s going to require changes both in China and the United States, and that will shape our common strategy.
MR. KELLY: Okay, thank you.


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A New Strategic and Economic Dialogue with China


Hillary Rodham Clinton
Secretary of State
Timothy Geithner, Secretary of the Treasury
The Wall Street Journal
July 27, 2009

When the United States and China established diplomatic relations 30 years ago, it was far from clear what the future would hold. In 1979, China was still emerging from the ruins of the Cultural Revolution and its gross domestic product stood at a mere $176 billion, a fraction of the U.S. total of $2.5 trillion. Even travel and communication between our two great nations presented a challenge: a few unreliable telephone lines and no direct flights connected us. Today China’s GDP tops four trillion dollars, thousands of emails and cellphone calls cross the Pacific Ocean daily, and by next year there will be 249 direct flights per week between the U.S. and China.

To keep up with these changes that affect our citizens and our planet, we need to update our official ties with Beijing. During their first meeting in April, President Barack Obama and President Hu Jintao announced a new dialogue as part of the administration’s efforts to build a positive, cooperative and comprehensive relationship with Beijing. So this week we will meet together in Washington with two of the highest-ranking officials in the Chinese government, Vice Premier Wang Qishan and State Councilor Dai Bingguo, to develop a new framework for U.S.-China relations. Many of our cabinet colleagues will join us in this “Strategic and Economic Dialogue,” along with an equally large number of the most senior leaders of the Chinese government. Why are we doing this with China, and what does it mean for Americans?

Simply put, few global problems can be solved by the U.S. or China alone. And few can be solved without the U.S. and China together. The strength of the global economy, the health of the global environment, the stability of fragile states and the solution to nonproliferation challenges turn in large measure on cooperation between the U.S. and China. While our two-day dialogue will break new ground in combining discussions of both economic and foreign policies, we will be building on the efforts of the past seven U.S. administrations and on the existing tapestry of government-to-government exchanges and cooperation in several dozen different areas.

At the top of the list will be assuring recovery from the most serious global economic crisis in generations and assuring balanced and sustained global growth once recovery has taken hold. When the current crisis struck, the U.S. and China acted quickly and aggressively to support economic activity and to create and save jobs. The success of the world’s major economies in blunting the force of the global recession and setting the stage for recovery is due in substantial measure to the bold steps our two nations have taken.

As we move toward recovery, we must take additional steps to lay the foundation for balanced and sustainable growth in the years to come. That will involve Americans rebuilding our savings, strengthening our financial system and investing in energy, education and health care to make our nation more productive and prosperous. For China it involves continuing financial sector reform and development. It also involves spurring domestic demand growth and making the Chinese economy less reliant on exports. Raising personal incomes and strengthening the social safety net to address the reasons why Chinese feel compelled to save so much would provide a powerful boost to Chinese domestic demand and global growth.

Both nations must avoid the temptation to close off our respective markets to trade and investment. Both must work hard to create new opportunities for our workers and our firms to compete equally, so that the people of each country see the benefit from the rapidly expanding U.S.-China economic relationship.

A second priority is to make progress on the interconnected issues of climate change, energy and the environment. Our two nations need to establish a true partnership to put both countries on a low-carbon pathway, simultaneously reducing greenhouse gas emissions while promoting economic recovery and sustainable development. The cross-cutting nature of our meetings offers a unique opportunity for key American officials to meet with their Chinese counterparts to work on the global issue of climate change. In the run-up to the international climate change conference in Copenhagen in December, it is clear that any agreement must include meaningful participation by large economies like China.

The third broad area for discussion is finding complementary approaches to security and development challenges in the region and across the globe. From the provocative actions of North Korea, to stability in Afghanistan and Pakistan, to the economic possibilities in Africa, the U.S. and China must work together to reach solutions to these urgent challenges confronting not only our two nations, but many others across the globe.

While this first round of the U.S.-China Strategic and Economic Dialogue offers a unique opportunity to work with Chinese officials, we will not always agree on solutions and we must be frank about our differences, including establishing the right venues to have those discussions. And while we are working to make China an important partner, we will continue to work closely with our long-standing allies and friends in Asia and around the world and rely on the appropriate international groups and organizations.

But having these strategic-level discussions with our Chinese counterparts will help build the trust and relationships to tackle the most vexing global challenges of today—and of the coming generation. The Chinese have a wise aphorism: “When you are in a common boat, you need to cross the river peacefully together.” Today, we will join our Chinese counterparts in grabbing an oar and starting to row.


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