U.S. Treasury Secretary Becerra: It is absurd that the IMF still regards China as a "developing country"; the long-term depletion of the U.S. is unsustainable (full speech summary)

US Treasury Secretary Scott Bessent, speaking at the Institute of International Finance yesterday (23), said that the global financial system has become unbalanced, and he especially named China, believing that China's economic model is unsustainable, and calling on the International Monetary Fund (IMF) and the World Bank to return to their founding mission. (Synopsis: U.S. Treasury Secretary Bescent: "There is no guarantee that the economy will not decline" but the current pullback is harmless, and Trump is preventing the financial crisis from breaking out again) (Background supplement: Trump nominated Bescent to be the US Treasury secretary, his stance on cryptocurrencies, support for bitcoin reserves? U.S. Treasury Secretary Scott Bessent delivered a speech on the current state of the financial system at the Institute of International Finance (IIF) late yesterday (23), in which he emphasized: The imbalances in the global financial system urgently need to be addressed, and he called on the International Monetary Fund (IMF) and the World Bank to return to their founding mission and adopt reforms. Focus on core tasks to promote economic stability and growth. At the same time, he criticized China's export-dependent economic model as unsustainable, but predicted that trade tensions between the United States and China would ease, and advocated that the United States will continue to expand its international influence with an "America First" policy, promoting fair trade and global rebalancing. In addition, he urged the IMF to rigorously monitor the distorting policies of surplus countries, stressing that the World Bank should prioritize energy access and technology-neutral investments, and stop lending to countries that have met graduation criteria, such as China, to improve resource efficiency and poverty reduction. This article is derived from the full text of Becent's speech released by the U.S. Department of the Treasury, and is compiled and organized for readers as follows. Introduction Thank you for your kind introduction. It is an honor for me to speak here. In the final months of World War II, Western leaders summoned the most prominent economists of their generation. What is their task? Create a new financial system. In a quiet retreat in the mountains of New Hampshire, they laid the foundation for "Pax Americana." The architects of the Bretton Woods system recognized that the global economy required global coordination. To facilitate this coordination, they created the International Monetary Fund (IMF) and the World Bank. These two sister institutions were born at a time of extreme geopolitical and economic turmoil. The goal of the IMF and the World Bank is to better balance national interests with the international order to bring stability to an unstable world. In short, their goal is to restore and maintain balance. That remains the mission of the Bretton Woods institutions. However, today's international economic system is rife with imbalances. The good news is: this doesn't have to be the case. This morning, my goal is to outline a blueprint to restore balance to the global financial system and its supporting institutions. I've spent most of my career observing outside the circle of financial policy. Today, I'm in the circle, looking outward. I am eager to work with you to restore order to the international system. To achieve this, however, we must first return the IMF and the World Bank to their founding missions. The IMF and the World Bank have lasting value. But mission deviations have derailed these institutions. We must implement key reforms to ensure that the Bretton Woods institutions serve their stakeholders, not the other way around. Restoring global financial equilibrium requires sober leadership from the International Monetary Fund and the World Bank. This morning, I will explain how they can lead to a safer, stronger, and more prosperous global economy. I invite my international counterparts to join us in pursuing these goals. On this point, I want to make it clear: "America First" does not mean "America alone." Rather, it is a call for deeper cooperation and mutual respect among trading partners. "America First" is not a retreat, but seeks to expand America's leadership role in international institutions such as the International Monetary Fund and the World Bank. By assuming a stronger leadership role, America First aims to restore fairness to the international economic system. Global Imbalances and Trade The imbalances I just mentioned are particularly pronounced in the area of trade. So the United States is now taking action to rebalance global trade. For decades, successive administrations have relied on the false assumption that our trading partners will implement policies that promote global economic balance. However, the harsh reality we face is that the United States has long faced large and persistent trade deficits due to an unfair trading system. Deliberate policy choices by other countries have hollowed out U.S. manufacturing, weakened our critical supply chains, and put national and economic security at risk. President Trump has taken tough action to address these imbalances and their negative impact on the American people. This large and persistent imbalance is not sustainable. This is not sustainable for the United States, and ultimately unsustainable for other economies. I know "sustainability" is a buzzword here. But I'm not talking about climate change or carbon footprint. I'm talking about economic and financial sustainability, which raises living standards and keeps markets running. If the international financial institutions are to succeed in their missions, they must focus on maintaining that sustainability. In response to President Trump's tariff announcement, more than 100 countries have approached us to help rebalance global trade. These countries have responded positively and openly to the President's efforts to create a more balanced international system. We are having a meaningful dialogue and look forward to engaging with more countries. China, in particular, needs to rebalance. Recent data show that China's economy has shifted further away from consumption and towards manufacturing. China's economic system, which is driven by manufacturing exports, would create even greater imbalances with its trading partners if the status quo were maintained. China's current economic model is based on solving economic woes through exports. This is an unsustainable model that harms not only China, but the whole world. China needs to change. China itself knows it needs to change. Everyone knows that change is needed. We also want to help it change because we also need to rebalance. China can start by shifting its economic model to reduce excess export capacity and instead support its own consumers and domestic demand. Such a shift would contribute to the much-needed global rebalancing. Of course, trade is not the only factor in global economic imbalances. Continued overdependence on U.S. demand has led to an increasingly unbalanced global economy. Policies in some countries encourage excessive saving, inhibiting private-sector-led growth. In other countries, wages are artificially depressed, which also dampens growth. These practices make the global economy more vulnerable by making it dependent on U.S. demand. In Europe, former ECB President Mario Draghi has identified several reasons for economic stagnation and made several proposals to get the economy back on track. European countries should give serious consideration to his proposal. I appreciate that Europe has taken some preliminary steps that have been taken belatedly. These measures have created new sources of global demand and are also related to the strengthening of Europe in the field of security. I believe that global economic relations should reflect security partnerships. Security partners are more likely to have compatible economic structures that enable mutually beneficial trade. If the United States continues to provide security guarantees and open markets, then our allies must respond with stronger mutual defense commitments. Europe's initial actions in increasing fiscal and defense spending prove that the Trump administration's policies are working. U.S. Leadership at the International Monetary Fund and World Bank The Trump administration and the U.S. Treasury Department are committed to maintaining and expanding U.S. economic leadership around the world, particularly in international financial institutions. The International Monetary Fund and the World Bank play a key role in the international system.