Full text of U.S. Treasury Secretary Benson's speech: It will take 2-3 years for China and the United States to reach a trade agreement

Source: Pengyouquan

Since April, Trump's so-called reciprocal tariff policy has set off huge waves. Global stock markets, especially US stocks, have fluctuated violently during Trump's repeated jumps this month. Wall Street giants may never have suffered such huge losses in such a short period of time.

On April 23, US time, US Treasury Secretary Bessent delivered a keynote speech at the Institute of International Finance. As perhaps the only professional economic team in Trump's team, his statement is crucial.

In his speech, he said that the United States and China have the opportunity to reach a big deal: the United States will reshape the trade balance by strengthening manufacturing, while China will reduce its dependence on exports and take more "domestic circulation". If China seriously moves in this direction, the United States and China can work together.

The following is the full text of the speech and Q&A:

Host:

Today's scene is indeed full and the atmosphere is warm. Now, I am honored to invite US Treasury Secretary Scott Bessent to give a keynote speech.

On January 28, 2025, Mr. Bessant was sworn in as the 79th Secretary of the Treasury of the United States, shouldering a series of important tasks - not only to protect the country's economic strength, promote growth and create jobs, but also to enhance national security by combating various economic threats and protecting the financial system. Mr. Bessant has more than 40 years of experience in global investment management. He has worked and communicated in more than 60 countries and maintained close dialogue with leaders and central bank governors. He is widely regarded as an expert on currencies and fixed income and is also a contributor to many economics and business journals.

Next, the Minister will deliver a keynote speech, followed by a conversation with Tim Adams. Let's welcome the Secretary of the Treasury with a warm applause!

Bessant:

Thank you for the warm introduction. It's an honor to be here.

At the end of World War II, Western leaders convened the most outstanding economists of the era with an important task: to build a new financial system.

At a quiet retreat in the mountains of New Hampshire, they laid the foundation for Pax Americana.

The architects of the Bretton Woods system knew that global economic development would depend on global coordination and cooperation. They created the International Monetary Fund (IMF) and the World Bank to promote such cooperation.

These two “sister institutions” were born in the aftermath of a profound geopolitical and economic upheaval, with one fundamental goal: to better align national interests with the international order and thus bring stability to an unstable world.

In short, their mission was to restore and maintain balance.

That mission is still the purpose of the Bretton Woods system. Yet, when we look around the international economic system today, we see imbalances in almost every aspect.

The good news is that it doesn’t have to be that way. This morning, I hope to lay out a blueprint for rebalancing the global financial system and reinvigorating the international institutions whose mission it was to protect it.

I have spent much of my career observing the workings of financial policy circles from the outside. Now I am inside, looking out. I am very much looking forward to working with you to restore order to the international system.

To do that, we must first return the IMF and the World Bank to their founding purpose.

The IMF and the World Bank have enduring value, but mission drift has taken them off course. We must advance critical reforms to ensure that the Bretton Woods institutions work for their true stakeholders—and not the other way around.

Rebalancing global finance will require clear and committed leadership from the IMF and the World Bank. This morning, I will describe how they can provide that leadership to create a safer, stronger, and more prosperous economic system for the world.

I also want to take this opportunity to invite our international counterparts to work together to achieve this goal.

Let me be clear at this point: America First does not mean America Alone. On the contrary, it represents our desire for deeper and more respectful engagement with our trading partners.

“America First” is not a retreat, but a reflection of our willingness to take on more responsibility and exercise stronger leadership in international institutions such as the IMF and the World Bank. By strengthening leadership, we hope to restore fairness to the international economic system.

Global Imbalances and Trade

The imbalances I just mentioned are particularly evident in the field of global trade. This is why the United States has decided to take action now to reshape the global trade landscape.

For decades, successive U.S. administrations have relied on a false assumption that our trading partners would actively pursue policies that would help balance the global economy. But the reality is that the United States has long suffered large and persistent trade deficits under an unfair trading system.

The deliberate policy choices of other countries have hollowed out America’s manufacturing base, undermined our critical supply chains, and even threatened our national and economic security. President Trump has taken decisive steps to address these imbalances and their negative impact on the American people.

The current serious and long-standing imbalances are simply unsustainable. It is unsustainable for the United States, and in the long run, for other economies.

I know that “sustainability” is a very popular word these days. But I am not talking about climate change or carbon footprint. I am talking about economic and financial sustainability—the kind of stability that actually improves people’s lives and ensures that markets function properly. If international financial institutions are to achieve their mission, they must make this sustainability their sole focus.

After President Trump announced his tariffs, more than a hundred countries have reached out to us to express their desire to participate in the process of rebalancing global trade. These countries have been very responsive and open to the President’s call for a fairer international system. We are engaging in constructive dialogue with them and look forward to engaging with more countries.

China in particular needs to rebalance. The latest data shows that China’s economy is moving further away from consumption and toward manufacturing. If the status quo continues, China’s growth model, which is dominated by manufacturing exports, will only exacerbate the imbalance with its trading partners.

China’s current economic model essentially “passes on” its economic problems through exports. This is an unsustainable model that harms not only China itself but also the world.

China must change. China knows it must change. The world knows it. And we want to help because we need to rebalance, too.

China can start by cutting its export capacity in favor of domestic consumers and domestic demand. This shift will help achieve the rebalancing that the world desperately needs.

Of course, trade is only part of the global imbalance. The long-term dependence of the global economy on US demand has made the system increasingly unbalanced.

In some countries, policies have encouraged excessive savings, stifling private-sector growth; in others, artificially low wages have also constrained growth. These practices have increased global dependence on US demand and made the entire world economy more fragile than it should be.

In Europe, former European Central Bank President Mario Draghi has clearly identified the multiple sources of economic stagnation and proposed a series of countermeasures. European countries should take these proposals seriously.

I commend Europe for taking these first, overdue but necessary steps. These steps will provide new sources of demand for the global economy, but they also represent a greater European responsibility for security.

I have always believed that global economic relations should be complementary to security partnerships.

Security partnerships are more likely to create a structurally compatible, mutually beneficial economic system. If the United States continues to provide security guarantees and open markets, our allies must make a stronger commitment to collective defense. Europe’s recent actions on fiscal and defense spending are examples of how the Trump administration’s policies are beginning to work.

U.S. Leadership in the IMF and World Bank

The Trump Administration and the U.S. Treasury are committed to maintaining and expanding U.S. leadership in the global economic system. This is particularly true in the area of ​​international financial institutions.

The IMF and World Bank play a critical role in the international system. The Trump Administration will work with them as long as they are true to their missions.

In their current state, they are failing to meet that standard.

The two Bretton Woods institutions must return to their core missions, away from their current agendas and scattered goals. The expansion of the agenda has weakened their ability to fulfill their fundamental responsibilities.

Next, the Trump Administration will further use the United States’ influence and leadership in these institutions to push them to focus on their missions and work. We will also hold their management and staff accountable for real results.

I invite you to join us in pushing the IMF and the World Bank to refocus on their core missions. This is in all our common interests.

International Monetary Fund

First, we must make the IMF what it is.

The IMF’s core mission is to promote international monetary cooperation, promote balanced growth in international trade, encourage economic development, and prevent harmful policies such as competitive exchange rate devaluations. These functions are vital to the U.S. and global economies.

Yet the IMF is now suffering from mission drift. The institution that was once unwavering in its commitment to global monetary cooperation and financial stability now devotes too much time and resources to climate change, gender and social issues.

These issues are not the IMF’s responsibility, and this deviation has weakened its ability to focus on core macroeconomic issues.

The IMF must become an institution that tells the truth ruthlessly, and not just to certain members. Unfortunately, the IMF has chosen to turn a blind eye. Its 2024 External Sector Report is titled "Imbalances are Receding", a "blindly optimistic" judgment that reflects an institution more committed to maintaining the status quo than asking critical questions.

In the United States, we know that we must get our finances in order. The previous administration created the largest peacetime fiscal deficit in American history, and the current administration is working hard to reverse this situation.

We welcome criticism, but we cannot accept the IMF's silence on those countries that deserve the most criticism, especially those with long-term trade surpluses.

According to its core mandate, the IMF must call out countries that have long engaged in policies that distort the global economy, manipulate currencies, and are opaque, such as China.

I also expect the IMF to sound the alarm about irresponsible lending practices by some creditor countries. The IMF should be more proactive in getting official bilateral creditors to step in early and coordinate with borrowers to shorten the duration of debt distress.

The IMF must refocus its lending function on addressing balance of payments problems and ensure that lending is temporary.

When the responsibilities are clear and the operations are done properly, IMF lending is at the heart of its contribution to the global economy: the IMF can provide support when markets fail, and in exchange, borrowers implement economic reforms to address their imbalances and boost growth.

The changes that these reforms bring about constitute one of the IMF’s most important contributions to building a strong, sustainable, and balanced global economy.

Argentina is a prime example. Earlier this month, I visited Argentina to show U.S. support for the IMF’s efforts to help the country’s fiscal restructuring. Argentina deserves IMF support because it has made real progress toward meeting fiscal benchmarks.

But not all countries deserve the same treatment. The IMF must be held accountable to countries that fail to implement reform commitments and say “no” when necessary. The IMF is not obliged to lend to countries that refuse to reform.

The IMF’s success should be measured by the ability of supported countries to achieve economic stability and growth, not by the volume of its loans.

World Bank

Like the IMF, the World Bank must reshape its role and return to its roots.

The World Bank Group helps developing countries grow their economies, reduce poverty, attract private investment, create private sector jobs, and reduce reliance on foreign aid. It provides transparent, affordable, long-term financing to support countries’ own development priorities.

Like the IMF, the World Bank provides extensive technical support to low-income countries to help them achieve debt sustainability, which enables them to better deal with coercive, opaque loan terms from other creditors.

These core functions complement the Trump administration’s efforts to promote a safer, stronger, and more prosperous economic system in the United States and around the world.

But the reality is that the World Bank has also strayed from its original purpose in some ways.

It should no longer expect to obtain a “blank check” through flashy and buzzword-filled propaganda, let alone perfunctory reform commitments.

In the process of returning to its mission, the World Bank must use its resources more efficiently and effectively, and truly create tangible value for all member countries.

At present, a key direction for the World Bank to improve the efficiency of resource use is to focus on improving energy accessibility.

Global business leaders generally point out that unstable power supply is one of the main obstacles to investment. The "Mission 300 Program" jointly launched by the World Bank and the African Development Bank aims to provide reliable electricity to an additional 300 million people in Africa, which is a commendable effort.

But the Bank must also go further to respond to countries’ energy priorities and needs, focusing on reliable technologies that can truly support economic growth, rather than chasing distorting climate finance indicators.

We applaud the Bank’s recent announcement that it will lift its ban on nuclear energy support. This shift has the potential to revolutionize the energy structure of many emerging markets. We encourage the Bank to move forward and provide countries with equal access to all technologies that can provide affordable, stable basic electricity.

The Bank should remain technology-neutral and prioritize “affordability” in its energy investments.

In most cases, this means investing in natural gas or other fossil fuel-based energy projects; in other cases, it also includes renewable energy projects equipped with energy storage or dispatch systems.

Human history tells us a simple truth: energy abundance leads to economic prosperity.

Therefore, the Bank should advocate a “multi-pronged” energy development path. Such an approach will not only improve its financing efficiency, but will also truly return the Bank to its core mission of promoting economic growth and poverty reduction.

In addition to improving energy access, the World Bank could use its resources more efficiently by implementing its graduation policy.

The policy aims to direct more of the Bank’s lending resources to the poorest, least creditworthy developing countries. These are also where the Bank’s support will have the greatest impact on poverty reduction and growth.

In reality, however, the Bank continues to lend every year to countries that have long since met the graduation criteria. This continued lending lacks justification, crowds out resources for high-priority projects, inhibits the development of private capital, and weakens the motivation of these countries to move away from their dependence on the Bank and toward a path of job growth driven by the private sector.

Looking forward, the Bank must set a clear timetable for exiting countries that have long since met the graduation criteria.

It is absurd to continue to regard China, the world’s second largest economy, as a “developing country.”

It is true that China’s rise has been impressive, albeit in part at the expense of Western markets. But if China wants to play a role in the global economy commensurate with its strength, it should also complete its graduation.

We welcome this.

In addition, the World Bank should promote transparent procurement policies based on “best value” to help countries move away from a procurement model that is based solely on “lowest price”.

“Low price only” procurement often encourages industrial policies that rely on subsidies and distort markets; it can suppress the development of private enterprises, encourage corruption and collusion, and ultimately raise overall costs.

By contrast, a procurement policy based on “best value” is a better choice from both an efficiency and development perspective; and its strong enforcement will truly benefit the World Bank and its shareholder countries.

On this issue, I would also like to make the strongest statement on procurement policies for Ukraine reconstruction assistance: no institution, no matter who it is, that has provided funding or supplies to the Russian war machine is eligible to apply for funding from the Ukraine Reconstruction Fund. No exceptions.

Conclusion

Finally, I would like to reiterate my sincere invitation to our allies - please join us in promoting the rebalancing of the international financial system and returning the IMF and the World Bank to their founding mission.

"America First" does not mean that we will withdraw, but it means that we will more firmly participate in the international economic system, including playing a more active role in the IMF and the World Bank.

A more sustainable international economic system will better serve the common interests of the United States and all participating countries.

We look forward to working with you to achieve this common goal.

Thank you!

Question and Answer:

Tim Adams:

Minister, thank you for your wonderful speech and thank you all for coming today. The sentence just now, "America First does not mean America Alone" is particularly powerful, and it can be said that many people present are relieved. So can it be understood that as long as these international institutions return to their original intentions and focus on the right things, the United States will continue to participate in them?

BESENT:

That's exactly right. I made it very clear during my confirmation hearing: The United States should actively participate in these international multilateral institutions - not just participate, but make a difference and win results in them. This is not just for ourselves, but for the world.

Tim Adams:

You mentioned rebuilding the global financial order. In fact, 20 years ago, a senior Treasury official said that the IMF "is not capable of dealing with global imbalances", but every Treasury secretary since then has different priorities. So how would you do it differently? What are the specific concepts and practices?

BESENT:

The first thing is to clarify the focus. We need to reset the direction and measurement standards of these institutions and return them to their original mission. I come from the private sector and am more accustomed to looking at results and timelines. You know, these issues have actually been discussed for 20 or 30 years. Some countries may still think they can wait another 100 years, but we don't have that time.

Tim Adams:

In this regard, C is the key point that cannot be avoided. You are also about to meet with your Chinese counterparts. Is there any way to make them realize that more discussions are not as good as doing something practical?

Bessant:

In fact, there is no need to say more about the reason. They know it in their hearts, but they lack the external push and motivation for execution. I first went to Japan in 1990, when the economic bubble had just burst; in 2012, I met Shinzo Abe who was preparing for the election. He quickly launched "Abenomics". Ten years later, Japan's economy recovered significantly. I believe that my Chinese counterparts will also realize this.

I have said before that we have the opportunity to reach a big agreement between the United States and China: the United States will reshape the trade balance by strengthening manufacturing, and China will reduce its dependence on exports and go more "domestic circulation". If China is serious about moving in this direction, we can work together. Of course, as you said, the core of all this is that we have to control our own finances. The current US deficit accounts for 6% of GDP, which is not a long-term solution.

Tim Adams:

Can you elaborate on how important it is to include fiscal adjustment in the global rebalancing framework?

Bessant:

This is a crucial link. Most of you here have received systematic economic training and understand that trade deficits come from three key factors: the first is trade policy itself, including tariffs, non-tariff barriers, exchange rate manipulation, and subsidies to labor and production factors; the second is the budget deficit. The higher the deficit, the greater the "attractiveness" of imported external goods, which also pushes up interest rates; the third is the US dollar exchange rate. The United States has always adhered to a "strong dollar" policy, and its value is determined by the market. The so-called strong dollar does not refer to the high or low price, but to winning the favor of capital and the confidence of the market through sound policies.

Our problem is not insufficient income, but excessive expenditure. I suggest that President Trump keep the long-term deficit at around 3% of GDP, matching it with 2% inflation or nominal growth, and achieve higher growth through good policies.

Tim Adams:

You have brought up the idea of ​​the “dollar privilege” that was proposed by Bob Rubin and Valéry Giscard d’Estaing in the 1960s. Some people see it as a burden rather than a privilege. What do you think of the dollar’s ​​status as the world’s reserve currency? Will it fade over time?

Bessant:

I believe that the dollar will remain the world’s number one reserve currency in my lifetime. And to be honest, I don’t think any country really wants to replace it. The euro was once highly anticipated, but it has appreciated too quickly recently and has become a burden for export-oriented economies. To maintain the dollar’s ​​status, a key part is to rebuild trust in international institutions.

Tim Adams:

You just visited Europe not long ago, and many people feel that Europe is brewing a “renaissance”. What do you think? Is this a good opportunity for Europe to take on more global demand?

Bessant:

It is indeed a good opportunity, but there are also many challenges. I have to say that we should thank President Trump for getting many European leaders to do what they have not been able to do in the past 26 years: convince Germany to increase fiscal spending to boost the European economy. This is both a fiscal stimulus and a way to share the burden of European defense. As I often say, economic security is national security, and national security is economic security. If the new European plan works, I will fully support it. I recently had a private chat with the Spanish Finance Minister, and he is very confident about the EU's future military spending, which I am very sure of.

Tim Adams:

Minister, you are now promoting many key directions at the same time: the rebalancing of China and the United States, European opportunities, and the rebalancing of US domestic demand (including the fiscal deficit). So what specific expectations do you have for the IMF next? What do you hope Ms. Georgieva and her Board of Governors should do?

Bessant:

In a word: return to the basics. The IMF has indeed gone astray in recent years. There are too many and too complicated topics. It needs to "weed out" and refocus on the core tasks of international balance of payments and balanced growth, while setting clear goals and achievement measurement standards.

Tim Adams:

Let's talk about energy. You mentioned nuclear energy in your speech. The United States is now the world's largest oil producer, producing about 13 million barrels a day. In which areas should we work harder in the future? How can the World Bank better support fossil energy, nuclear energy and other forms of energy?

Bessant:

Sufficient energy is the soul of economic growth. We have to help countries design a development rhythm that suits them: first "climb", then "run", and finally "rush". Real sustainable development must start with basic electricity supply. Some people are still obsessed with fantasy, thinking that renewable energy can solve the problem once and for all, but the reality is that water pumps must be turned, electric heating must be turned on, and hospitals must be powered on. Even middle-income countries like South Africa are still facing frequent power outages. So we have to stabilize the base load power first, and then consider how to gradually connect to other energy sources such as renewable energy, rather than letting renewable energy be the first to launch, which will cause the industry to be unable to operate normally.

Tim Adams:

Finally, let's talk about financial intermediaries. Capitalism without capital is just an empty "ism", and the US capital market and financial intermediaries are crucial both internally and externally. What is your vision for future regulation? How should this industry develop in the future?

Bessant:

Private credit has been a hot topic recently. I think it represents the diversified development of the US financial system, but its current operation is partially outside the supervision, to some extent because the supervision was too tight after the 2008 crisis, and the space for traditional financial institutions was compressed. We plan to rely on the "Financial Stability Oversight Council" (FSOC), in conjunction with the Federal Reserve, the Office of the Comptroller of the Currency and the Federal Deposit Insurance Corporation (FDIC), to create a more flexible and resilient regulatory framework to stimulate the vitality of compliant finance. One of the unique features of American finance is that there are a large number of community banks and small and medium-sized banks, which provide 70% of agricultural loans, 40% of small and micro loans and housing loans nationwide. In most G7 countries, a few large banks have the final say. In the past, Wall Street led everyone forward, but now it is time for "Main Street" to share the results. Many small banks have shrunk in the past decade due to regulatory pressure, and the real economy has stagnated. We are determined to fix this.

Tim Adams:

Thank you again. The Treasury Department has always been the "voice of sober reason", and it is this rational voice that everyone hears today. I wish you all the best! Let us thank the Secretary of the Treasury again with warm applause!