Ahead of the fourth round of the U.S.-China Strategic and Economic Dialogue (S&ED) next week in Beijing, Treasury Secretary Tim Geithner delivered remarks today outlining the progress made to date in advancing opportunities for American workers and companies doing business with China as well as the economic challenges that remain in the U.S.-China economic relationship. He also underscored the importance of enhancing cooperation between the U.S. and China to address those challenges and detailed what both countries can do to help reinforce the global recovery and create jobs.
In his remarks, Secretary Geithner outlined significant progress made with China in the last three years in growing U.S. exports, improving the protection of U.S. intellectual property rights, unwinding China's discriminatory indigenous innovation accreditation system, opening up new sectors to U.S. and other foreign firms, negotiating new rules on official export financing, appreciating China's exchange rate, and bringing down China's trade surplus.
In addition to longstanding concerns regarding piracy of U.S. intellectual property, government procurement preferences, taxes and tariffs and other limitations on market access in some sectors, Secretary Geithner outlined key financial sector reforms in China, along with leveling the playing field with China's state-owned enterprises and further appreciation of Chinese currency, as a key priority for the upcoming meeting of the S&ED.
"Financial reform in China will help reduce one of the main advantages China's state-owned enterprises have in competing with U.S. companies," said Secretary Geithner.
China's financial system channels preferential financing to large state-owned banks limiting the products and returns from savings available to Chinese consumers. This both limits consumption and starves China's most innovative firms and sectors of capital, despite massive domestic savings. In his remarks, Secretary Geithner explained that to promote a more efficient financial sector, Chinese interest rates will need to better reflect market forces. More choices for Chinese consumers and greater returns to savers will increase Chinese households' ability to consume goods and services, including from the United States.
Secretary Geithner delivered the remarks at the Commonwealth Club in San Francisco.