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May 11, 2004
JS-1661 Statement by John B. Taylor, Under Secretary of the
Treasury for International Affairs, in Beijing, China This has been a very productive visit to China and I’d like to thank Ambassador Randt for the excellent assistance of Embassy Beijing and also express my appreciation for the hospitality extended to my delegation from our Chinese hosts.
We have had in depth discussions with China’s economic officials, with private economists, and with members of the financial community. I was also pleased to be joined in these meetings by Ambassador Paul Speltz, who was recently named by Treasury Secretary Snow as his personal emissary to Beijing on financial and foreign exchange issues.
This visit to Beijing is actually the first leg of a trip that will take us to three countries in Asia. Later this afternoon we will travel to Tokyo to discuss the return of economic growth there, and later this week we will travel to Korea for meetings of the Asian Development Bank where I will be discussing economic issues with finance ministers from several countries in the region. When discussing China, I think it’s helpful to emphasize that China is rapidly becoming a more important trading partner of the United States, a significant engine of growth in Asia, and has a greater impact on the global economy than ever before.
The global economy is performing extraordinarily well. Thanks to good monetary and fiscal policy, the U.S. economy has recovered and is now demonstrating very strong, non-inflationary growth. Asia, of course, is growing rapidly. Japan, after many years of slow growth, has returned to solid, sustainable growth. We also see signs of growth returning to Latin America, and emerging market economies like Russia and Turkey are doing well. While growth in Europe is mixed, some countries are performing very well. And Germany and France are working to put in place policies that will lead to a return to growth.
Economic growth in China is helping to drive growth throughout Asia. There is some concern that China is “overheating.” In our meetings we tried to gauge the degree of their overheating, whether there are inflationary concerns, and to understand the ways in which policymakers are dealing with these issues.
We had extensive discussions on the issue of China’s exchange rate regime. That China intends to move toward greater flexibility in its exchange rate regime is very welcome and will be helpful to the world economy. We had very useful discussions as to how China intends to implement this policy and the implications this will bring for China, and for the global trading system.
I expressed my view that greater flexibility in China’s exchange rate would allow for smooth adjustments and prevent the kinds of “hard landings” or “boom-bust” cycles that concern traders and investors and are so costly to any country. It’s important that currency flexibility is combined with the appropriate use of monetary policy instruments and continued structural reforms in financial services.
I come away from these meetings encouraged that policymakers in China are making progress on all fronts. Our level of engagement with Chinese authorities is helping to lead to progress. President Bush and Vice-President Cheney have visited China, as has Treasury Secretary Snow, Commerce Secretary Evans and U.S. Trade Representative Zoellick. Labor Secretary Chao also plans to visit soon. In addition to these high-level meetings, in-depth discussions of key financial and economic issues continue at all levels. We recently began a Technical Cooperation Program with China to discuss financial and foreign exchange issues and expect additional meetings in June.
Our continued dialogue and cooperation on economic issues at all levels is important to ensure sustained economic growth in our own economies, in the region and in the global economy.
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