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5/12/2020 Remarks by Under Secretary Lael Brainard to the Council on Foreign Relations U.S. DEPARTMENT OF THE TREASURY Press Center Remarks by Under Secretary Lael Brainard to the Council on Foreign Relations 1/21/2011 As Prepared for Delivery All eyes were on the meeting between President Obama and President Hu of China this week. And appropriately so. At a time when the strength of America’s jobs engine depends more than ever on demand from outside our borders, whether we achieve our ambitious export goals will depend in great part on improving access to China’s market, given the sheer scale and velocity of its growth. U.S. exports grew twice as fast to China as to the rest of the world last year and are on track to reach $100 billion. A decade ago, China did not rank among our top 10 export markets. Today, it is our third largest and fastest growing export market. At the same time, China is also wrestling with economic transition challenges of its own. China faces the challenge of shifting from a developing country dependent on foreign consumption and technology to a middle-income country with growth driven more and more by domestic consumption and innovation. Of shifting from closed capital markets and a fixed exchange rate to a currency increasingly used in international transactions and to more open financial markets. The course it steers naturally affects the opportunities and constraints faced by American innovators, producers, workers and farmers. This remarkable rise has been enabled to an extraordinary degree by the open trade and investment system nurtured and supported by America for decades. And China’s ability to successfully navigate these transitions while maintaining strong growth will depend in no small part on maintaining continued access to America’s markets and investment opportunities. So a lot was at stake for the two leaders in the economic realm. President Obama made important progress in our four priority areas: 1. First, China made an important commitment to level the playing field by agreeing not to link the provision of government procurement preferences to its innovation policies. We and U.S. industry have long been concerned about the possibility of this link being used to discriminate unfairly against innovative U.S. products and services, especially given the size of the Chinese government purchase market. With innovation at the heart of American competitive advantage, we have pursued intensive and consistent engagement at the highest levels with China on this issue. China also committed to submit a revised offer to join the WTO Agreement on Government Procurement and that will include sub-central entities by the end of 2011 – an important step in ensuring that our companies will be able to compete in China’s procurement market. 2. Second, we secured concrete progress on intellectual property rights enforcement, another key priority for the United States. This week, China agreed to put in place audit and budget mechanisms to ensure that government agencies at all levels use legitimate software and publish the audit results. 3. Third, China affirmed its commitment to enhance exchange rate flexibility and dropped previous references to maintaining basic stability at an equilibrium rate, while noting the connection to the broader goal of transforming its economic development model. This is consistent with China’s commitment to enhance the role of domestic demand and particularly consumption in powering its growth, as elaborated in its new five-year plan, and with the broader commitment to rebalancing. There has been progress: in the past six months, China’s exchange rate has appreciated more than 3.5 percent against the dollar. Taking into account relative inflation in both countries, this amounts to roughly 10 percent appreciation on an annual basis. We will stay closely and intensively engaged with China as it navigates a course towards an increasingly market determined and international currency. 4. Finally, a significant amount of commercial deals for U.S. firms were concluded. $45 billion in additional U.S. exports were announced across a range of industries, which will support a quarter of a million U.S. jobs. From green energy to aircraft to microelectronics, these purchases and partnerships represent a trading relationship that grows broader and deeper by the day. So we are pleased with the progress that was made. But we are not complacent. China’s economic dynamism presents a challenge but also an opportunity; it reminds us to tend to the core foundations of our nation’s economic security – our capacity to save and invest, to innovate, to learn. We are clear eyed that the most important steps we can take to strengthen America’s future lie in our own hands. https://www.treasury.gov/press-center/press-releases/Pages/tg1032.aspx 1/2 5/12/2020 Remarks by Under Secretary Lael Brainard to the Council on Foreign Relations https://www.treasury.gov/press-center/press-releases/Pages/tg1032.aspx 2/2
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