Full text of U.S. Treasury Secretary Basant's speech and Q&A: It will take 2-3 years for China and the U.S. to reach a trade agreement, which will balance manufacturing and consumption relations.

Organizer: Peng You Circle, Special Contributor to Tencent News

Since April, Trump's so-called reciprocal tariff policy has caused a huge stir. Global stock markets, especially the U.S. stock market, have experienced severe fluctuations this month due to Trump's erratic behavior, and Wall Street giants may have never lost such a huge amount in such a short time.

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

In his speech, he stated that the United States and China have the opportunity to reach a major agreement: on the U.S. side, by strengthening manufacturing to reshape the trade balance, and on the Chinese side, by reducing reliance on exports and focusing more on the "domestic circulation." If the Chinese side seriously moves in this direction, China and the U.S. can work together.

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

Host:

Today, the venue is indeed full, and the atmosphere is lively. Now, I am honored to invite U.S. Treasury Secretary Scott Bessent to deliver 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 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. Besant has over forty years of experience in the global investment management field, having worked and communicated in more than sixty countries, maintaining close dialogue with leaders and central bank governors. 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 the keynote speech, followed by a dialogue with Tim Adams. Let's give a warm round of applause to the Secretary of the Treasury!

Bescent:

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

As World War II approached its conclusion, leaders of Western countries convened the most distinguished economists of that era, who were tasked with an important mission: 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 understood that the development of the global economy must rely on global coordination and cooperation. 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 to an unstable world.

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

This mission still represents the meaning of the existence of the Bretton Woods system. However, when we look around at the current international economic system, we see imbalances almost everywhere.

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 have been observing the operations of the financial policy circle from outside the system. Now, I am looking out from within the system. 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 purposes.

The IMF and the World Bank have enduring value, but "mission drift" has caused them to stray off course. We must advance key reforms to ensure that the Bretton Woods system serves the true stakeholders – and not the other way around.

To restore balance in the global financial system, the IMF and the World Bank need to demonstrate clear and strong 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 make it clear: "America First" does not mean "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 a retreat, but 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. Through strengthened 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 false assumption: that our trade partners would proactively implement policies that contribute to a balanced global economy. The reality is that the U.S. has long endured a substantial and persistent trade deficit within an unfair trade system.

The intentional 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 impact on the American people.

The current long-standing severe imbalance 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 popular term nowadays. But what I'm referring to is not climate change or carbon footprint. I'm talking about economic and financial sustainability—the kind that can effectively improve people's living standards and ensure the stability of normal market operations. If international financial institutions want to fulfill their missions, they must make this sustainability their sole focus.

After President Trump announced the tariff policy, more than one hundred countries have actively reached out to us, expressing a desire to participate in the process of reshaping 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 communicating with more countries.

Among them, China particularly needs to rebalance. The latest data shows that the Chinese economy is increasingly moving away from consumption-driven growth and is instead relying on manufacturing. If this situation persists, 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 shifts its own economic challenges 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 knows 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 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 only 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 saving, suppressing private sector-led growth; others artificially depress wages, similarly restricting 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 responses. European countries should take these suggestions seriously.

Currently, Europe has taken a belated but necessary first step, and I affirm this. These measures will provide new sources of demand for the global economy, while also meaning that Europe is taking on greater responsibility 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 on 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 the United States' leadership position 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 are able to faithfully fulfill their missions, the Trump administration will fully cooperate with them.

However, under the current circumstances, 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 missions. 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 fulfill 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 pushing 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 U.S. and the global economy.

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

These issues are not within the responsibilities of the IMF, and such a deviation weakens its ability to address core macroeconomic issues.

The IMF must become an "institution that speaks the truth without pulling punches," and not just for certain member countries. Unfortunately, the current IMF chooses to "look the other way." Its 2024 report titled "External Sector Report" bizarrely claims that "imbalances are dissipating," reflecting a kind of "blind optimism" that indicates an institution more committed to maintaining the status quo rather than addressing critical issues.

In the United States, we clearly know that we must rectify our finances. The previous administration created the largest budget deficit in peacetime in American history, and the current administration is making every effort to reverse this situation.

We welcome critical opinions, but we cannot accept the IMF's silence on those countries that should be criticized the most—especially those with a long-standing trade surplus.

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

I also hope that the IMF can issue warnings regarding the irresponsible lending practices of certain creditor countries. The IMF should take a more proactive approach to encourage official bilateral creditor countries to intervene early and coordinate 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 proper, IMF loans are the core manifestation of its contribution to the global economy: when market failures occur, the IMF can step in to provide support; in exchange, borrowing countries 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 case in point. Earlier this month, I visited Argentina to demonstrate U.S. support for the IMF's efforts to help restructure the country's finances. Argentina deserves the support of the IMF, as it has made substantial progress in meeting its fiscal benchmarks.

But not all countries deserve to be treated equally. The IMF must hold accountable those countries that fail to uphold their reform commitments and firmly say "no" when necessary. The IMF is not obligated to lend to countries that refuse to reform.

The measure of the IMF's success should be the ability of the supported countries to achieve economic stability and growth, rather than the total amount of its 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 jobs in the private sector, and reduce reliance on foreign aid. It provides transparent and affordable long-term financing support tailored to the development priorities of each country.

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 Trump administration's efforts to establish a safer, stronger, and more prosperous economic system in the United States and globally.

But the reality is that the World Bank has deviated from its original intention in some aspects.

It should no longer expect to obtain a "blank check" through flashy and trendy terminology in its propaganda, nor should it use vague reform promises to shirk responsibility.

In the process of returning to its mission, the World Bank must use its resources more efficiently and effectively, and 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 hindering investment. The "Mission 300 Initiative" launched 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.

However, the World Bank must further respond to the energy priorities and actual needs of different countries, focusing on reliable technologies that can truly support economic growth, rather than blindly chasing distorting climate financing targets.

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, providing all countries with equal access to technologies that can provide affordable and stable basic electricity.

The World Bank should adhere to 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 teaches us a simple lesson: abundant energy leads to economic prosperity.

Therefore, the World Bank should advocate for a "multi-faceted" energy development approach. This practice will not only enhance its financing efficiency but also truly align the World Bank with its core mission of promoting economic growth and reducing poverty.

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 enable the World Bank to allocate more loan resources to the poorest and lowest credit-rated developing countries. These countries are also where the World Bank's support has the greatest impact on poverty reduction and growth.

However, in reality, the World Bank still provides loans every year to those countries that have long met the "graduation" criteria. This ongoing lending lacks justifiable reasons; it crowds out 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 seeing China, the world's second-largest economy, as a "developing country."

Indeed, the speed of China's rise is impressive, although this process has come at the expense of Western markets to some extent. However, if China wishes to play a role in the global economy that is commensurate with 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 "lowest price" bidding.

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

In contrast, a "value-for-money" oriented procurement policy is a superior 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 policies for aid in the reconstruction of Ukraine: any entity that has provided funding or materials to the Russian war machine, regardless of who they are, is disqualified from participating in the funding applications for the Ukraine Reconstruction Fund. There are 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 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 with everyone to strive tirelessly 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. That statement "America First does not mean America alone" was particularly powerful, and it seems to have relieved many people in attendance. So can it be understood that as long as these international institutions return to their original intent and focus on the right matters, the United States will continue to participate?

Bescent:

Absolutely correct. I made it very clear at my nomination hearing: the United States should actively engage in these international multilateral institutions—not just participate, but also make a difference and achieve results. This is not only for ourselves, but truly for the whole world.

Tim Adams:

You mentioned rebuilding the global financial order. In fact, twenty years ago, a senior official from the Treasury said that the IMF "lacked the ability to respond to global imbalances," but every subsequent finance minister has had different priorities. So how would you do things differently? What specific ideas and approaches 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 discussed for twenty or thirty years, and some countries may 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 also about to meet with your Chinese colleagues. What ways can you make them realize that discussing further is not as effective as taking action?

Bessent:

Actually, there is no need to say more about the reasoning; they are clear in their hearts, but they just lack the external motivation and execution power. I went to Japan for the first time in 1990, just after experiencing the economic bubble burst; 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 my Chinese counterparts will also recognize this point.

I previously mentioned that we have the opportunity to reach a major agreement between the US and China: the US can reshape trade balance by strengthening manufacturing, while China can reduce its reliance on exports and focus 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 accounts for 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? Can you elaborate on this?

Bescent:

This is a crucial part. Most of you here are systematically trained in economics and understand that the trade deficit comes from three key factors: first, trade policy itself, including tariffs, non-tariff barriers, exchange rate manipulation, and subsidies to labor and factors of production; The second is the budget deficit, the higher the deficit, the greater the "attractiveness" of imported external goods, and at the same time pushing up interest rates; The third is the dollar exchange rate, the United States has always adhered to the "strong dollar" policy, and the market determines its value. The so-called strong dollar does not refer to the level of quotations, but to win the favor of capital and the confidence of the market through prudent policies.

Our problem is not insufficient income but excessive spending. I suggest that President Trump keep the long-term deficit around 3% of GDP to match the 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 people see it as a burden rather than a privilege. What is your view on the status of the dollar as a global reserve currency? Is this status likely to fade over time?

Bescent:

I believe that during my lifetime, the US dollar will remain the world's primary reserve currency. To be honest, I don't think any country truly 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 position, a key element is to rebuild trust in international institutions.

Tim Adams:

You recently visited Europe, 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?

Besent:

It is indeed a good opportunity, but there are also many challenges. I have to say this - we should thank President Trump, as he has done something that several European leaders have not been able to do in twenty-six years: convince Germany to increase its fiscal spending, which stimulates the European economy. This is both 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 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 expenditure, which I also strongly believe.

Tim Adams:

Minister, you are currently advancing many key directions simultaneously: the rebalancing of China and the U.S., opportunities in Europe, and the rebalancing of U.S. domestic demand (including the fiscal deficit). 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 mixed topics, needing to "clear the weeds" and refocus on the core tasks of international balance of payments and balanced growth, while setting clear goals and measurement standards for achievements.

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 exert more effort in the future? How can the World Bank better support fossil fuels, nuclear energy, and other forms of energy?

Bescent:

Sufficient 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 relying on renewable energy can solve everything, but the reality is that pumps need to run, electric heating needs to be on, and hospitals need continuous power. Even a middle-income country like South Africa still faces frequent power outages. Therefore, we need to stabilize the basic load power supply first, and then consider how to gradually integrate renewable energy and other energy sources, rather than letting renewable energy take the lead, resulting in industries being unable to operate normally.

Tim Adams:

Lastly, let's talk about financial intermediaries. Capitalism without capital is just an empty "ism". The capital markets and financial intermediaries 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 operations is outside of regulation, partly because of 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), 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 that will invigorate compliant finance. One of the unique features of American finance is the large number of community banks and small to medium-sized banks, which provide 70% of the nation's agricultural loans, 40% of small and micro loans, and housing loans. In contrast, most other G7 countries are dominated by a few large banks. Previously, Wall Street led everyone forward; now it's time for Main Street to share in the results. Many small banks have held back in the past decade due to regulatory pressure, and the real economy has stagnated as a result. We are determined to fix this issue.

Tim Adams:

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