Q&A with Secretary of the Treasury Timothy Geithner in Beijing
Hillary Rodham Clinton
Secretary of StateBeijing, ChinaMay 25, 2010MODERATOR: 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 CLINTON: Thank you.
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.
