US Treasury Secretary Becent Bescent's speech and Q&A: It will take 2-3 years for China and the United States to reach a trade agreement

Original title:US Treasury Secretary Becent last night's speech and Q&A full text: It will take 2-3 years for China and the United States to reach a trade agreement.

Original source: Tencent News

Since April, Trump's so-called reciprocal tariff policy has caused huge waves. Global stock markets, especially the US stock market, fluctuated violently this month during Trump's repeated jumps, and Wall Street giants may have never lost such a huge amount in such a short period of time. On April 23, US Treasury Secretary Bescent 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 agreement: the United States reshapes the trade balance by strengthening manufacturing, while China reduces its dependence on exports and pursues more "domestic circulation". If China is serious in this direction, the United States and China can work together.

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

host:

The scene was indeed full and the atmosphere was warm. Now, I am honored to invite U.S. Treasury Secretary Scott Bessent to give a keynote speech.

On January 28, 2025, Mr. Becente was sworn in as the 79th Secretary of the Treasury in 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. Becent has more than 40 years of experience in the field of global investment management, has worked and exchanged in more than 60 countries, and has maintained close dialogue with leaders of various countries and central bank governors. He is widely regarded 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, followed by a conversation with Tim Adams. Let us welcome the Minister of Finance with warm applause!

Besent:

Thank you for your enthusiastic introduction. It's a great honor to be here. As World War II approached, leaders of Western countries summoned the most outstanding economists of that era, who shouldered 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 are well aware that the development of the global economy must rely on global coordination and cooperation. It is precisely to facilitate this cooperation that they created the International Monetary Fund (IMF) and the World Bank. This "sister institutions" were born after a profound geopolitical and economic turmoil. The fundamental goal is to better connect national interests with the international order, thereby bringing stability in an unstable world.

In short, their mission is to restore and maintain a balance. This mission is still the significance of the existence of the Bretton Woods system. However, when we look around the current international economic system, we see almost everywhere.

The good news is: the situation doesn't have to develop like this. This morning, I hope to draw a blueprint for you to reshape the balance of the global financial system and revitalize international institutions that originally undertake the mission of protecting this system. Most of my career has been observing the operation of the financial policy circle outside the system. Now, I stand within the system and look outward. I am very much looking forward to working with you to restore order to the international system.

To achieve this, we must first bring the IMF and the World Bank back to its original intention. The IMF and the Bank have lasting value, but "mission drift" has already taken them off course. We must advance key reforms to ensure that the Bretton Woods system serves real stakeholders—not the other way around.

To restore global finance to balance, the IMF and the World Bank need to demonstrate clear and firm leadership. This morning, I will explain how they can play such a leadership role to create a safer, stronger, and more prosperous economic system for the world. I also hope to take this opportunity to invite our international colleagues to work together to achieve this goal.

On this point, I want to make it clear: "America first" does not mean "America travels alone". On the contrary, it represents our desire to engage in deeper and more respectful cooperation with our trading partners. "America First" is not a retreat, but a manifestation of our willingness to assume more responsibilities and strengthen 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 imbalance and trade

The imbalance I mentioned just now is particularly evident in the field of global trade. This is exactly why the United States decided to take action now to reshape the global trade landscape. For decades, successive U.S. governments have based on the false assumption that our trading partners will proactively implement policies that contribute to the balance of the global economy. But the reality is that the United States has been suffering from a huge and sustained trade deficit for a long time under an unfair trading system.

The intentional policy choices of other countries have emptied the U.S. manufacturing base, undermined our critical supply chains, and even threatened our national and economic security. President Trump has taken decisive measures to deal with these imbalances and the negative impact they have on the American people. This long-standing serious imbalance cannot be sustained at all. It is not sustainable for the United States, and in the long run, for other economies.

I know that "sustainability" is a very popular word these days. But what I want to say is not climate change or carbon footprint. What I am talking about is the sustainability of economy and finance - the kind of stability that can effectively improve people's living standards and ensure the normal operation of the market. If international financial institutions want to achieve their mission, they must make this sustainability the sole focus.

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

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

China's current economic model is essentially "transferring" its own economic problems through exports. This is an unsustainable model that not only harms China itself, but also risks to the entire world. China must change. China itself also knows that it must change. The whole world knows this. And we are willing to help because we ourselves need to rebalance. China can start by reducing export capacity and instead support the development of domestic consumers and domestic demand markets. This shift will help achieve the rebalancing that the globally urgently needs.

Of course, trade is only part of the global economic imbalance. The long-term dependence of the global economy on U.S. demand has made the entire system increasingly unbalanced. Some countries have policies that encourage excessive savings, suppress private-sector-led growth; others have artificially reduced wages, which have also restricted growth. These practices have exacerbated the global dependence on U.S. demand and made the entire world economy more vulnerable than it should.

In Europe, former European Central Bank President Mario Draghi has pointed out a number of causes of economic stagnation and has put forward a series of response suggestions. European countries should take these suggestions seriously. At present, Europe has taken the first step that is late but necessary, and I am sure of it. These measures will provide a new source of demand for the global economy, and also mean that Europe has taken on greater responsibility for security matters.

I always believe that global economic relations should complement security partnerships. It is more likely to build a structurally compatible and mutually beneficial economic system. If the United States continues to provide security and open markets, our allies must make stronger commitments on collective defense. Europe's latest move in fiscal and defense spending is an example of the beginning of performance in Trump's administration's policies.

The U.S. leadership in the IMF and the World Bank

The Trump administration and the U.S. Treasury Department are committed to maintaining and expanding the U.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 fulfill their mission faithfully, the Trump administration will work with them with all their might.

But under the current state, these two institutions failed to meet the standards. The two major institutions of the Bretton Woods system must withdraw from the current state of complex issues and scattered goals and return to their core mission. Issue expansion has weakened their ability to perform their fundamental duties.

Next, the Trump administration will further leverage the U.S. influence and leadership in these institutions to push them to focus on their mission and play their role. We will also require the management and staff of these agencies to take responsibility for real results. I sincerely invite you to join us in promoting the IMF and the World Bank to refocus their core mission. It is in the common interest of all of us.

International Monetary Fund (IMF)

First, we must make the IMF a true IMF again. The core mission of the IMF is to promote international monetary cooperation, promote balanced growth of international trade, encourage economic development, and prevent the emergence of harmful policies such as competitive exchange rate depreciation. These functions are crucial to both the U.S. and the global economy.

However, the IMF is now suffering from a "mission drift". This institution, which was once unwaveringly committed 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 capabilities on the core issues of the macroeconomics. The IMF must become a “institution that speaks the truth without mercy” and not just to some member states. Unfortunately, the current IMF chooses to "turn a blind eye". Its 2024 "External Department Report" titled "Imbalance is fading". This "blind optimistic" judgment reflects that an institution is more committed to maintaining the status quo rather than raising key questions.

In the United States, we know clearly that we must rectify our own finances. The previous administration created the largest fiscal deficit in peacetime in U.S. history, and the current administration is making every effort to turn that around.

We welcome criticism, but we cannot accept that the IMF is silent on the countries that deserve the most criticism—especially those with a long-standing trade surplus. According to its core responsibilities, the IMF must name countries that have long been opaque to distort global economic policies, manipulate currencies, such as China.

I also expect the IMF to warn of irresponsible lending practices in certain creditor countries. The IMF should be more proactive in promoting the early intervention of official bilateral creditor countries and coordinate with borrowing countries, thereby shortening the duration of debt difficulties. The IMF must refocus its lending function, focus on solving balance of payments issues and ensure that the loan is temporary.

When responsibilities are clear and operational, IMF's loans are the core manifestation of its contribution to the global economy: when markets fail, the IMF can provide support; in exchange, borrowing countries need to implement economic reforms to resolve imbalances in revenue and expenditure and drive growth. The changes brought about by these reforms constitute one of the most important contributions of the IMF to building a strong, sustainable and balanced global economy.

Argentina is a typical example. Earlier this month, I visited Argentina to show U.S. support for the IMF’s help in the country’s fiscal restructuring efforts. Argentina should be supported by the IMF because it has made substantial progress in achieving fiscal benchmarks. But not all countries deserve equal treatment. The IMF must be responsible for countries that fail to implement their reform commitments and firmly say “no” when necessary. The IMF has no obligation to lend to countries that refuse to reform.

The criterion for measuring the success of the IMF should be the ability to support the country to achieve economic stability and growth, rather than the amount of its total loans.

World Bank

Like the IMF, the World Bank must reshape its functional positioning and return to its roots. The World Bank Group is committed to helping developing countries develop their economies, reduce poverty, attract private investment, create private sector jobs, and reduce dependence on foreign aid. It provides transparent, affordable, long-term financing support for countries' own development priorities.

Like the IMF, the Bank also provides extensive technical support to low-income countries to help them achieve debt sustainability, which allows these countries to better respond to 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 deviated from its original intention in some ways. It should no longer expect to obtain "blank checks" through flashy and fashionable propaganda, nor should it be perfunctory with vague reform commitments. In its return to mission, the Bank must use its resources more efficiently and effectively and create tangible value for all member states.

At present, a key direction for the World Bank to improve resource utilization efficiency is to focus on improving energy accessibility. Global business leaders generally point out that unstable electricity supply is one of the main obstacles to investment. The Mission 300 Program jointly initiated by the World Bank and the African Development Bank is aimed at providing reliable electricity to the added 300 million new population in Africa, which is a worthy effort.

But the Bank must further respond to countries' energy priorities and actual needs, focusing on reliable technologies that can truly support economic growth, rather than blindly pursuing distorted climate financing indicators. We appreciate the recent announcement by the Bank to lift its ban on nuclear energy support. This transformation is expected to revolutionize the energy structures in multiple emerging markets. We encourage the Bank to continue to move forward and provide countries with equal access to all technologies that provide affordable and stable basic electricity.

The World Bank should adhere to technology neutrality and prioritize “affordability” in energy investment. In most cases, this means investing in natural gas or other fossil fuel-based energy projects; in other cases, renewable energy projects equipped with energy storage or dispatch systems. Human history tells us a simple truth: only sufficient energy can bring economic prosperity.

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

In addition to improving energy accessibility, the Bank can also use resources more effectively by implementing its "graduation policy". The goal of this policy is to allow the Bank to use more lending resources to the poorest developing countries with the lowest credit rating. These countries are also the most impactful places in the Bank’s support in poverty reduction and growth.

However, in reality, the World Bank still provides loans to countries that have long met the "graduation" standards every year. This continued lending lacks justification, it squeezes out resources for high-priority projects, curbs the development space of private capital, and weakens the motivation for these countries to get rid of their dependence on the World Bank and turn to a private-sector-engineered employment growth path.

Looking ahead, the Bank must set clear exit schedules for countries that have long met graduation standards. It is ridiculous to continue to regard China, the world's second largest economy, as a "developing country".

Granted, China's rise is impressive, although the process comes partly at the cost of the Western market. But if China wants to play a role in the global economy that is comparable to its strength, it should also complete its "graduation". We welcome this.

In addition, the World Bank should also promote transparent procurement policies based on "optimal value" to help countries get rid of the procurement model that is simply based on "lowest price" winning bids. "Low-price" procurement often encourages industrial policies that rely on subsidies and distort markets; it may suppress private enterprise development, promote corruption and collusion, and ultimately raise overall costs. In contrast, the "optimal value"-oriented procurement policy is a better choice from the perspective of efficiency and development; and its strong implementation will also truly benefit the World Bank and its shareholder countries.

Regarding this issue, I also want to issue the most solemn statement on the procurement policy of Ukrainian reconstruction assistance: Any institution that has provided funding or supplies to the Russian war machine, whoever is, is not eligible to participate in the funding application for the Ukrainian reconstruction fund. No exception.

Conclusion

Finally, I would like to send a sincere invitation to our allies - to work with us to promote the rebalancing of the international financial system and to bring the IMF and the World Bank back to its mission at the time of its founding.

"America First" does not mean that we will withdraw, but that we will be more determined to 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 work tirelessly for this common goal. Thank you everyone!

Q&A session:

Tim Adams: Minister, thank you for your wonderful speech and for your arrival today. The sentence just now, "America's priority does not mean that the United States is alone" is particularly powerful, which can be said to have relieved many people present. So is it understandable that as long as these international institutions return to their original aspirations and focus on the important things, the United States will always participate?

Besent:

Totally correct. I made it clear at my nomination hearing: the United States should actively participate in these international multilateral institutions -not only participate, but also make a difference and win results in it. This is not only for ourselves, but also for the global world.

Tim Adams: You mentioned rebuilding the global financial order. In fact, twenty years ago, a senior finance official said that the IMF "has insufficient ability to deal with global imbalances", but since then, every finance minister has different priorities. Then how would you do it differently? What are the specific concepts and practices?

Besent:

The first thing is to clarify the key points. We need to re-orientate the direction and measurement of these institutions to return to their original mission. I come from the private sector and am more used to looking at results and schedules. You know, we have actually talked about these issues for twenty or thirty years. Some countries may still think they can wait for another 100 years, but we don’t have that time.

Tim Adams: In this regard, C is the point that cannot be avoided. You are also about to meet with your Chinese colleagues. Is there any way to make them realize that no matter how much discussion is, it is better to do something practical?

Besent:

In fact, there is no need to say anything more. They know in their hearts that they just lack the motivation to promote and execute externally. I went to Japan for the first time in 1990, when I had just experienced the bursting of the economic bubble; in 2012, I met Shinzo Abe who was preparing to run for the election, and he quickly launched "Abe Economics". Ten years later, Japan's economy recovered significantly. I believe that Chinese colleagues will also recognize this.

I have also said before that we have the opportunity to reach a major agreement between the United States and China: the United States reshapes the trade balance by strengthening manufacturing, while China reduces its dependence on exports and pursues more of the "domestic circulation". If China is serious in this direction, we can work together. Of course, as you said, the core of all this is that we have to control the finances ourselves. The current deficit in the United States accounts for 6% of GDP, which is not a long-term solution.

Tim Adams: How important is it to incorporate fiscal adjustment into the global rebalancing framework? Can you talk about it?

Besent:

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

Our problem is not insufficient income, but excessive expenditures. I recommend that President Trump control the long-term deficit to around 3% of GDP, match it with 2% inflation or nominal growth and achieve higher growth through good policies.

Tim Adams: You mentioned again the concept of "dollar privilege" 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 US dollar's status as a global reserve currency? Will this status fade over time?

Besent:

I believe that in my lifetime, the US dollar will be the world's number one reserve currency. And to be honest, I don’t think any country really wants to replace it. The euro was once highly expected, but its appreciation has been too fast recently, which is a burden on an export-oriented economy. To maintain the status of the US dollar, the key link 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 "revival". What do you think? Is this a good opportunity for Europe to undertake more global demand?

Besent:

It is indeed a good opportunity, and of course there are many challenges. I have to say one thing - we should thank President Trump for letting many European leaders do what they have not been able to do in twenty-six years: convince Germany to increase fiscal spending and drive the European economy. This is both a fiscal stimulus and a sharing of the European defense burden. As I often say, economic security is national security, and national security is economic security. If the new European plan works, I will support it with all my strength. I recently talked with the Spanish Minister of Finance in private and he is very confident in the EU's future investment in military spending, which I am very sure of.

Tim Adams: Minister, you are now advancing many key directions: rebalancing between China and the United States, European opportunities, and rebalancing of US domestic demand (including fiscal deficit). So what specific expectations do you have for the IMF next? Hope Ms. Georgeeva and her council should do it?

Besent:

In a word: Return to the origin. The IMF has indeed gone astray in recent years. There are too many issues and it is necessary to "weed removal" and refocus on the core tasks of balance of payments and balanced growth, while setting clear goals and measurement standards for results.

Tim Adams: Let 's talk about energy again. You specifically mentioned nuclear energy in your speech. The United States is now the world's largest oil producer, with production of about 13 million barrels per day. In what aspects should we work harder in the future? How can the World Bank better support fossil energy, nuclear energy and other forms of energy?

Besent:

Adequate 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". True sustainable development must start with basic electricity supply. Some people are still addicted to fantasy and think that renewable energy can be used once and for all, but the reality is that the water pump must be turned, the electric heating must be turned on, and the hospital must be constantly powered. Even middle-income countries like South Africa are facing frequent power outages. So we have to stabilize the basic load power first, and then consider how to gradually connect to other energy sources such as renewable energy instead of allowing renewable energy to be launched first, resulting in the industry not being able to operate normally.

Tim Adams: Finally, let’s talk about financial intermediaries. Capitalism has no capital, it is just an empty "ism", and the capital market and financial intermediaries in the United States are both crucial to the inside and outside. What is your vision for future regulation? How should this industry develop in the future?

Besent:

The topic of private equity credit has been quite hot recently. I think it represents the diversified development of the US financial system, but its current operations are partly outside of regulation, in part because the regulation was too tight after the 2008 crisis and the space for traditional financial institutions was compressed. We intend to rely on the Financial Stability Supervision Commission (FSOC), joining the Federal Reserve, the Currency Supervision Agency and the Federal Deposit Insurance Corporation (FDIC) to create a more flexible and resilient regulatory structure to stimulate the vitality of compliant finance. One of the unique features of American finance is that it has a large number of community banks and small and medium-sized banks, which provide 70% of the country's agricultural loans, 40% of small and micro loans, and housing loans. Most of the other countries in G7 have the final say. Before, Wall Street led everyone forward, but now it's time to share the results of Main Street. Many small banks have shrunk in the past decade due to high regulatory pressure, and the real economy has also stagnated. We are determined to fix this.

Tim Adams: Thank you again. The Ministry of Finance has always been the "sound of sober rationality", and today everyone hears this sound of rationality. I wish you all the best! Let us thank the Minister of Finance again with warm applause!