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

Source: Pengyou Circle

Since April, Trump's so-called reciprocal tariff policy has stirred up a storm. Global stock markets, especially the US stock market, have experienced dramatic fluctuations this month amid Trump's repeated back-and-forth moves, and Wall Street giants may have never lost such a large amount in such a short time.

On April 23, U.S. time, U.S. Treasury Secretary Bement delivered a keynote speech at the Institute of International Finance. As the only professional economist in Trump's team, his statements are crucial.

In the speech, he stated that the United States and China have the opportunity to reach a major agreement: the U.S. could reshape trade balance by strengthening its manufacturing sector, while China could reduce its reliance on exports and focus more on "domestic circulation." If China seriously moves in this direction, the U.S. and China could cooperate hand in hand.

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

Host:

Today, the venue is indeed packed, and the atmosphere is lively. Now, I am honored to invite U.S. Treasury Secretary Scott Bessent to give the keynote speech.

On January 28, 2025, Mr. Besant was sworn in as the 79th Secretary of the Treasury of the United States, taking on a series of important responsibilities—not only to safeguard the nation'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. Besant has over forty years of experience in global investment management, having worked and communicated in more than sixty countries, maintaining close dialogue with leaders and central bank governors from various nations. He is widely recognized as an expert in currency and fixed income, and is also a contributor to several economic and business journals.

Next, the Minister will deliver a keynote speech and then engage in a dialogue with Tim Adams. Let's give a warm welcome to the Minister of Finance!

Bescent:

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

As World War II was drawing to a close, the leaders of Western countries convened the most outstanding economists of that era, assigning them an important task: to establish a new financial system.

In a quiet resort in the New Hampshire mountains, they laid the foundation for "Pax Americana."

The designers of the Bretton Woods system were well aware that the development of the global economy must rely on coordinated cooperation worldwide. It was precisely to promote this cooperation that they created the International Monetary Fund (IMF) and the World Bank.

This "sister institution" was born out of a profound geopolitical and economic upheaval, with the fundamental goal of better aligning national interests with the international order, thereby bringing stability in an unstable world.

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

This mission still represents the significance of the Bretton Woods system today. However, when we look around the current international economic system, what we see is almost everywhere imbalances.

The good news is: the situation does not have to develop this way. This morning, I hope to outline a blueprint for reshaping the balance of the global financial system and revitalizing the international institutions that were originally tasked with safeguarding this system.

For most of my career, I observed the operation of the financial policy circle from outside the system. Now, I stand inside the system and look outward. I am very much looking forward to working with all of you to restore order to the international system.

To achieve this goal, 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 led them off course. We must push for key reforms to ensure that the Bretton Woods system serves the true stakeholders—not the other way around.

To restore balance to the global financial system, the IMF and World Bank need to demonstrate clear and steadfast leadership. This morning, I will elaborate on how they can play such a leadership role in creating a safer, stronger, and more prosperous economic system for the entire world.

I also hope to take this opportunity to invite our international colleagues to work together to achieve this goal.

At this point, I want to be clear: "America First" does not equal "America Alone." On the contrary, it represents our desire to engage in deeper and more mutually respectful cooperation with our trading partners.

"America First" is not about retreating, but rather a reflection of our willingness to take on more responsibilities and exert stronger leadership in international institutions such as the IMF and the World Bank. By strengthening our leadership, we hope to restore fairness to the international economic system.

Global Imbalance and Trade

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

For decades, successive U.S. governments have operated under a mistaken assumption: that our trading partners would actively implement policies that contribute to global economic balance. The reality is that the United States has long endured a large and persistent trade deficit under an unfair trading system.

The policy choices of other countries have hollowed out the manufacturing base of the United States, disrupted our critical supply chains, and even threatened our national and economic security. President Trump has taken decisive action to address these imbalances and their negative impacts on the American people.

The current severe imbalance that has long existed cannot be sustained. It is unsustainable for the United States and, in the long run, for other economies as well.

I know that "sustainability" is a very trendy word these days. But what I want to talk about is not climate change or carbon footprints. I'm referring to economic and financial sustainability—stability that can genuinely improve people's living standards and ensure the normal functioning of markets. If international financial institutions want to fulfill their mission, they must make this type of sustainability their sole focus.

After President Trump's announcement of the tariff policy, more than one hundred countries have actively contacted us, expressing their desire to participate in the process of reshaping the global trade balance. These countries have responded positively and openly to the President's proposal to establish a fairer international system. We are engaging in constructive dialogue with them and look forward to engaging with more countries.

Among them, China especially needs to rebalance. The latest data shows that the Chinese economy is increasingly moving away from consumption-driven growth and relying more on manufacturing. If the current situation continues, China's growth model, dominated by manufacturing exports, will only exacerbate the imbalance with its trading partners.

China's current economic model essentially shifts its economic problems through exports. This is an unsustainable model that not only harms China itself but also poses risks to the entire world.

China must change. China itself knows it must change. The whole world knows this. And we are willing to help because we also need to rebalance.

China can start by reducing export capacity and shift to supporting the development of domestic consumers and the domestic demand market. This transition will help achieve the global rebalancing that is urgently needed.

Of course, trade is just a part of the global economic imbalance. The long-term dependence of the global economy on American demand has made the entire system increasingly unbalanced.

Some countries' policies encourage excessive savings, suppressing growth led by the private sector; other countries artificially depress wages, similarly limiting growth. These practices exacerbate global dependence on U.S. demand and make the world economy more fragile than it should be.

In Europe, former European Central Bank President Mario Draghi has clearly pointed out various causes of economic stagnation and proposed a series of countermeasures. European countries should take these suggestions seriously.

Currently, Europe has taken a late but necessary first step, which I affirm. These measures will provide a new source of demand for the global economy, while also meaning that Europe is taking on greater responsibilities in security affairs.

I have always believed that global economic relations should complement security partnerships.

Between security partners, there is a greater possibility of building a structurally compatible and mutually beneficial economic system. If the United States continues to provide security guarantees and open markets, our allies must make stronger commitments to collective defense. Europe’s recent actions in fiscal and defense spending are a testament to the effectiveness of the Trump administration's policies.

The Leadership Position of the United States in the IMF and World Bank

The Trump administration and the U.S. Department of the Treasury are committed to maintaining and expanding America's leadership in the global economic system. This is particularly evident in the field of international financial institutions.

The IMF and the World Bank play a key role in the international system. As long as they can faithfully fulfill their missions, the Trump administration will fully cooperate with them.

However, in the current situation, these two institutions have failed to meet the standards.

The two major institutions of the Bretton Woods system must extricate themselves from the current state of complex issues and scattered goals, and return to their core mission. The expansion of issues has weakened their ability to fulfill their fundamental responsibilities.

Next, the Trump administration will further leverage the United States' influence and leadership in these institutions to drive them to focus on their missions and play their roles. We will also hold the management and staff of these institutions accountable for achieving real results.

I sincerely invite everyone to join us in urging the IMF and the World Bank to refocus on their core missions. This is in the common interest of all of us.

International Monetary Fund (IMF)

First, we must restore the IMF to be the real IMF.

The core mission of the IMF is to promote international monetary cooperation, facilitate balanced growth of international trade, encourage economic development, and prevent harmful policies such as competitive devaluation of currencies. These functions are crucial for both the US and the global economy.

However, the IMF is now suffering from a "mission drift." This institution, which was once firmly committed to global monetary cooperation and financial stability, is now investing too much time and resources into climate change, gender, and social issues.

These topics are not within the responsibilities of the IMF, and this deviation actually undermines its ability to address core macroeconomic issues.

The IMF must become an "institution that speaks the truth without holding back," and not just to certain member countries. Unfortunately, the current IMF has chosen to "look the other way." Its 2024 External Sector Report surprisingly has the title "Imbalances Are Diminishing," and this kind of "blind optimism" reflects an institution more committed to maintaining the status quo than to raising critical issues.

In the United States, we clearly understand that we must rectify our finances. The previous administration created the largest fiscal deficit in peacetime 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 that have long maintained a trade surplus.

According to its core responsibilities, the IMF must name those countries that have long adopted distorted global economic policies, manipulated currencies, and acted opaquely, such as China.

I also expect the IMF to issue warnings regarding the irresponsible lending practices of certain creditor countries. The IMF should take a more proactive role in encouraging official bilateral creditor countries to intervene early and engage in coordination with borrowing countries, thereby shortening the duration of debt distress.

The IMF must refocus its lending function, concentrating on addressing balance of payments issues and ensuring that loans are temporary in nature.

When responsibilities are clear and operations are appropriate, IMF loans are the core embodiment of its contribution to the global economy: when market failures occur, the IMF can step in to provide support; in exchange, the borrowing country must implement economic reforms to address imbalances and promote growth.

The changes brought about by these reforms constitute one of the most important contributions of the IMF in building a strong, sustainable, and balanced global economy.

Argentina is a typical example. Earlier this month, I visited Argentina to demonstrate the United States' support for the IMF's assistance in the country's fiscal restructuring efforts. Argentina should receive support from the IMF because it has made substantial progress in achieving fiscal benchmarks.

However, not all countries should be entitled to the same treatment. The IMF must hold accountable those countries that fail to fulfill their reform commitments and firmly say "no" when necessary. The IMF is not obligated 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 total amount of their loans.

World Bank

Like the IMF, the World Bank must also reshape its functional positioning and return to its origins.

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

Like the IMF, the World Bank also provides extensive technical support to low-income countries to help them achieve debt sustainability, enabling these countries to better cope with coercive and opaque loan terms from other creditors.

These core functions complement the efforts of the Trump administration to establish 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 deviated from its original intent in certain aspects.

It should no longer expect to obtain a "blank check" through flashy and trendy jargon, nor should it use vague reform commitments to brush aside responsibilities.

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

Currently, a key direction for the World Bank to enhance resource use efficiency 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" initiated jointly by the World Bank and the African Development Bank aims to provide reliable electricity for an additional 300 million people in Africa, which is a commendable effort.

But the World Bank must further respond to the energy priorities and practical needs of each country, focusing on reliable technologies that can truly support economic growth, rather than blindly chasing distorting climate financing metrics.

We appreciate the World Bank's recent announcement to lift the ban on support for nuclear energy. This shift is expected to fundamentally transform the energy structure of several emerging markets. We encourage the World Bank to continue moving forward by providing all countries with equal access to technologies that can offer affordable and stable base power.

The World Bank should uphold technological neutrality and prioritize "affordability" in 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: abundant energy leads to economic prosperity.

Therefore, the World Bank should advocate for a "multi-faceted" energy development approach. Such an approach will not only enhance its financing efficiency but also truly return the World Bank to its core mission of promoting economic growth and poverty reduction.

In addition to improving energy accessibility, the World Bank can also use resources more effectively by implementing its graduation policy.

The aim of this policy is to have the World Bank allocate more loan resources to the poorest developing countries with the lowest credit ratings. These countries are also where the World Bank's support has the most significant impact on poverty reduction and growth.

However, in reality, the World Bank continues to provide loans to countries that have long met the "graduation" criteria every year. This ongoing lending lacks justifiable reasons, as it squeezes resources for high-priority projects, suppresses the development space for private capital, and weakens these countries' motivation to break free from dependence on the World Bank and shift towards a job growth path driven by the private sector.

Looking to the future, the World Bank must set a clear exit timetable for those countries that have already met the graduation criteria.

It is absurd to continue to regard China, the world's second-largest economy, as a "developing country."

Indeed, China's rise has been impressive, although this process has partly come at the expense of Western markets. However, if China wishes to play a role in the global economy that matches its strength, it must also complete its "graduation."

We welcome this.

In addition, the World Bank should promote a transparent procurement policy based on "optimal value" to help countries move away from a procurement model solely oriented towards winning bids at the "lowest price."

"Low-price only" procurement often encourages industrial policies that rely on subsidies and distort the market; it may suppress private enterprise development, foster corruption and collusion, and ultimately raise overall costs.

In contrast, the "optimal value" oriented procurement policy is a better choice in terms of both efficiency and development; its strong implementation will also truly benefit the World Bank and its shareholder countries.

Regarding this issue, I would like to issue the most serious statement on the procurement policy for reconstruction aid to Ukraine: any institution that has provided funding or resources for the Russian war machine, regardless of who they are, is disqualified from participating in the funding applications for the Ukraine Reconstruction Fund. No exceptions.

Conclusion

Finally, I would like to extend a sincere invitation to our allies once again – please join us in promoting the rebalancing of the international financial system and restoring the IMF and the World Bank to their founding missions.

"America First" does not mean we will withdraw, but rather it signifies that we will participate more firmly 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 together with everyone to tirelessly strive for this common goal.

Thank you, everyone!

Q&A session:

Tim Adams:

Minister, thank you for your wonderful speech, and thanks to everyone for being here today. The phrase "America First does not mean America Alone" was particularly powerful and can be said to have relieved many people present. So can we understand that as long as these international institutions return to their original intentions and focus on their core tasks, the United States will continue to participate?

Bescent:

Absolutely correct. I stated very clearly at my nomination hearing: the United States should actively participate in these international multilateral institutions—not just participating, but making a difference and achieving results. This is not only for ourselves but truly for the world.

Tim Adams:

You mentioned rebuilding the global financial order. In fact, twenty years ago, a senior Treasury official said that the IMF "lacks the ability to respond to global imbalances," but every finance minister since then has had different priorities. So how would you do things differently? What specific ideas and practices do you have?

Bescent:

The first thing is to clarify the focus. We need to reset the direction and metrics of these institutions to bring them back 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 talked about for twenty or thirty years; some countries may even feel they can wait another 100 years, but we don’t have that time.

Tim Adams:

In this regard, C is an unavoidable focus. You are about to meet with your Chinese colleagues. Is there a way to make them realize that discussing more is not as effective as taking practical action?

Bescent:

Actually, there is no need to say more about the reasoning; they are clear in their hearts, but just lack the external motivation and execution force. When I first went to Japan in 1990, it had just experienced the bursting of its economic bubble; in 2012, I met Shinzo Abe, who was preparing to run for election, and he quickly launched "Abenomics." Ten years later, Japan's economy has significantly recovered. I believe that Chinese peers will realize this point as well.

I mentioned before that we have the opportunity to reach a major agreement between the US and China: on the US side, reshaping the trade balance through strengthening manufacturing, while on the Chinese side, reducing reliance on exports and focusing more on "domestic circulation." If China seriously moves in this direction, we can cooperate hand in hand. Of course, as you said, the core of all this is that we need to manage our finances. Currently, the US deficit is 6% of GDP, which is not a long-term solution.

Tim Adams:

How important is it to incorporate fiscal adjustments into the global rebalancing framework? Could you elaborate on this?

Bescent:

This is a crucial link. Most of you present have received systematic training in economics and understand that trade deficits stem from three key factors: first, trade policies themselves, including tariffs, non-tariff barriers, currency manipulation, and subsidies for labor and production factors; second, budget deficits, as the higher the deficit, the greater the "attractiveness" of imported external goods, while also pushing up interest rates; third, the exchange rate of the US dollar, as the United States has always adhered to a "strong dollar" policy, allowing the market to determine its value. The so-called strong dollar does not refer to the level of quotes, but rather to winning the favor of capital and market confidence through sound policies.

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

Tim Adams:

You mentioned again the concept of "dollar privilege" proposed by Bob Rubin and Valéry Giscard d’Estaing in the 1960s. Some see it as a burden rather than a privilege. What is your view on the status of the dollar as the global reserve currency? Will this status fade over time?

Bescent:

I believe that during my lifetime, the US dollar will still be the world's primary reserve currency. To be honest, I don't think any country really wants to replace it. The euro was once highly anticipated, but its recent rapid appreciation has become a burden for export-oriented economies. To maintain the dollar's status, a key element is to rebuild trust in international institutions.

Tim Adams:

You recently traveled to Europe, and many people feel that Europe is brewing a "revival." What do you think? Is this a good opportunity for Europe to take on more global demand?

Bescent:

It is indeed a good opportunity, but there are also many challenges. I must say - we should thank President Trump, as he has done what several European leaders have failed to achieve in the past twenty-six years: convincing Germany to increase fiscal spending and stimulate the European economy. This is both fiscal stimulus and sharing 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 can work, I will fully support it. I recently had a private conversation with the Spanish Minister of Finance, and he is very confident about the EU's future investment in military spending, which I also strongly agree with.

Tim Adams:

Minister, you are currently advancing many key directions at the same time: the Sino-U.S. rebalancing, opportunities in Europe, and the rebalancing of U.S. domestic demand (including the fiscal deficit). So what specific expectations do you have for the IMF moving forward? How do you hope Ms. Georgieva and her board should act?

Bescent:

In a nutshell: Return to the source. The IMF has indeed deviated in recent years, with too many and too varied topics. It needs to "clear the weeds" and refocus on the core tasks of international balance of payments and balanced growth, while setting clear goals and metrics for measuring outcomes.

Tim Adams:

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

Bescent:

Adequate energy is the soul of economic growth. We need to help countries design a development pace that suits them: first "crawl", then "run", and finally "sprint". True sustainable development must start with basic power supply. Some people are still indulging in fantasies, thinking that renewable energy can be a one-time solution, but the reality is that water pumps need to run, electric heating needs to be on, and hospitals must have continuous power. Even a middle-income country like South Africa is still facing frequent power outages. Therefore, we must stabilize the basic load power first before considering how to gradually integrate renewable energy and other energy sources, rather than letting renewable energy take the lead, which would prevent industries from operating normally.

Tim Adams:

Finally, let's talk about financial intermediaries. Capitalism without capital is just an empty "ism"; the capital markets and financial intermediary institutions in the United States are crucial both domestically and internationally. What is your vision for future regulation? How should this industry develop in the future?

Bescent:

Recently, the topic of private credit has been quite hot. I believe it represents the diversified development of the American financial system, but part of its current operation is outside of regulation, to some extent due to the overly tight regulations after the 2008 crisis, which have compressed the space for traditional financial institutions. We plan to rely on the Financial Stability Oversight Council (FSOC) to work 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 that stimulates the vitality of compliant finance. One of the unique aspects of American finance is the presence of a large number of community banks and small-to-medium-sized banks, which provide 70% of the country's agricultural loans, 40% of microloans, and housing loans. In contrast, most other G7 countries are dominated by a few large banks. Previously, Wall Street led the charge, but now it's time for Main Street to share in the benefits. Many small banks have held back in the past decade due to regulatory pressures, causing stagnation in the real economy. We are determined to fix this.

Tim Adams:

Thank you all again. The Ministry of Finance has always been the "voice of rationality and clarity". What you heard today is indeed this rational voice. I wish everyone all the best! Let's give a warm round of applause to once again thank the Minister of Finance!