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US Treasury Secretary Geithner’s Speech at Peking University


On June 1st 2009, Timothy Geithner, who would be in China on his 3-day maiden trip as the US Treasury Secretary, paid an official visit to Peking University, and delivered a speech entitled “The United States and China: Cooperating for Recovery and Growth” in the National School of Development (NSD). Accompanying with him also included other senior officials in the Treasury and the US Embassy in China.

On behalf of Peking University and the NSD, Dean Zhou Qiren hosted the event and extended his most sincere welcome for Secretary Geithner's return to the campus as an alumnus of Peking University where he studied Chinese in a language program in the early 1980s.

Professor Zhou also mentioned that Peter F. Geithner, the Secretary's father, who took a leading position in the Ford Foundation, has provided financial assistance to the China Center for Economic Research, antecedent of the NSD, in its initial stage. The audience, mainly students and faculty members of the university, burst into a lasting and appreciating applaud for this.

One of the major objectives of Geithner's visit is to pave way for the upcoming Sino-US Strategic and Economic Dialogue in Washington D.C. this summer and to participate in economic discussions with top officials in China in the coming days. It is generally seen as the first direct contact in the area of economics between the new Obama administration and the Chinese government.

In his speech, Geithner touched upon a series of topics including the current challenges and risks facing the US and the rest of the world, the urgency and necessity of laying the foundation for future growth, his prediction of the trends of economic cooperation between China and the US, and the importance of the international financial reform.

A reoccurring note of emphasis in Geithner's speech was that a concerted cooperation between China and the US was vital to the recovery and growth of the US economy and the rest of the world. China's booming economy and its increasing influence in the global forum, he suggested, has put it “in an enviably strong position” in the present global financial crisis.

A “positive, cooperative, and comprehensive relationship” was in the mutual interest of both countries who, when acted together, could “help shape a strong global strategy to contain the crisis and to lay the foundation for recovery," said Geithner.

He told the audience that, due to the prompt efforts by the Obama administration, initial signs of improvement were shown and “the global recession seems to be losing force”.

The consumer spending in the US would “be restrained for some time”, though confidence began to restore. He suggested that China continue to restructure its economy and make efforts to boost the domestic demand, which, he said, would strengthen its ability to “weather fluctuations in global supply and demand”. And it was beneficial to both countries because a strengthened domestic demand meant a more powerful engine for China's GDP growth as well as “a tremendous opportunity for U.S. firms and workers”.

Both China and the US were facing similar domestic challenges, as Geithner suggested that reforms in the health care system, education, infrastructure and energy efficiency were all on their priority lists to boost the production capacity.

The treasury chief made special emphasis on the necessity to undergo “a comprehensive health care reform that will bring down the growth in health care costs,” which have been the principal driver of the long run fiscal deficit for the US. This was partly meant to reassure China of the safety of its huge amounts of holdings of the dollar-denominated assets for the fiscal deficit of the US continued to build up.

In regard to the huge bank bailout packages, which occupied another considerable portion of the fiscal deficits, Geithner maintained that they “have been careful to set the economic term” for the financial institutions which needed the money, in order to “minimize risk to the taxpayer and to allow for an orderly exit or unwinding as soon as conditions permit”.

He said that China could learn a lesson from the shortcomings of the US “which have proved so damaging in the present crisis”. But, on the other hand, its “exceptional capacity to adapt and innovate and to channel capital for investment in new technologies and innovative companies” should be preserved and could be seen as a role model of a highly efficient capital market.

Geithner proposed that "an ambitious program of reform of the IMF" was on the way to reshape its functions and capacity to play a more important role in global financial surveillance. The US was intended to pump $500 billion into the IMF and would "fully support having China play a role ...that is commensurate with China''''''''''''''''s importance in the global economy". 

His speech also included a variety of heated subjects such as a more flexible exchange rate being beneficial to China's restructuring its economy, an open environment for trade and investment, new energy policies to counteract the climate change, etc.

In the Q & A session, Mr. Geithner accepted and elaborated on a couple of questions raised by students and faculty members of Peking University on a broad range of topics. He was impressed by the depth and variety of these questions which, for some, were quite thought-provoking and challenging for him.

After the speech, President Wu Zhipan of Peking University presented a special gift to Geithner, which, quite unexpected to him, was a precious photo taken 28 years ago when he was studying in Beida. Ms Fu Min, his former Chinese teacher, was also there and they had a happy and warm reunion which had moved everyone present.

About NSD:
The National School of Develop at Peking University, formerly called CCER and set up in 1994, is an academic think tank which focuses on tackling with important issues and policies vital for the overall well-being of China's economy.

For a Chinese translation of Geithner's speech in full length, please refer to