Compiled by: Pengyouquan, Tencent News special author
Since April, Trump's so-called reciprocal tariff policy has set off a huge wave. Global stock markets, especially US stocks, have fluctuated violently amid Trump's repeated jumps this month. Wall Street giants may have never suffered such huge losses in such a short period of time.
On April 23rd, U.S. Treasury Secretary Benson gave a keynote speech at the Institute of International Finance. As perhaps the only professional economist 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 deal: the United States will reshape the trade balance by strengthening manufacturing, and China will reduce its reliance on exports and move more toward a "domestic circulation." If China is serious about moving in this direction, the United States and China can work together.
The following is the full text of the speech and Q&A session:
host:
Today, the venue is packed and the atmosphere is lively. Now, I am honored to invite US Treasury Secretary Scott Bessent to give a keynote speech.
On January 28, 2025, Mr. Bessant was sworn in as the 79th U.S. Secretary of the Treasury, 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. Bessant has more than 40 years of experience in global investment management. He has worked and communicated in more than 60 countries and maintained close dialogue with leaders and central bank governors of various countries. He is widely regarded as an expert in currency and fixed income, and is also a contributor to many economic and business journals.
Next, the Minister will deliver a keynote speech, followed by a conversation with Tim Adams. Let’s give the Minister of Finance a big round of applause!
Bessant:
Thank you for the warm introduction. It's an honor to be here.
As World War II drew to a close, Western leaders convened the era’s most brilliant economists with a critical mission: to build a new financial system.
At a quiet retreat in the mountains of New Hampshire, they laid the foundation for Pax Americana.
The designers of the Bretton Woods system knew that the development of the global economy must rely on global coordination and cooperation. It was precisely to promote such cooperation that they created the International Monetary Fund (IMF) and the World Bank.
This pair of "sister institutions" was born after a profound geopolitical and economic turmoil. Their fundamental goal is to better align national interests with the international order and thus bring stability to an unstable world.
In short, their mission is to restore and maintain 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 imbalances almost everywhere.
The good news is: it doesn’t have to be this way. This morning, I want to lay out a blueprint for rebalancing the global financial system and reinvigorating the international institutions whose mission it is to protect it.
I have spent most of my career observing the workings of the financial policy world from the outside. Now I am inside the system, looking out. I very much look forward to working with you to restore order to the international system.
To achieve this goal, we must first return the IMF and the World Bank to their original purpose.
The IMF and the World Bank have enduring value, but mission drift has taken them off course. We must advance key reforms to ensure that the Bretton Woods institutions serve their true stakeholders—and not the other way around.
Restoring global finance to a balance requires clear and resolute leadership from the IMF and the World Bank. This morning, I will explain how they can provide that leadership and create a safer, stronger, and more prosperous economic system for the world.
I would also like to take this opportunity to invite our international colleagues to work together to achieve this goal.
Let me be clear at this point: America First does not mean America Alone. Quite the contrary, it represents our desire for deeper and more respectful cooperation with our trading partners.
"America First" is not a retreat, but a reflection of our willingness to assume more responsibilities and play a stronger leadership role in international organizations such as the IMF and the World Bank. By strengthening leadership, we hope to restore fairness in the international economic system.
Global Imbalances and Trade
The imbalances I just mentioned are particularly evident in global trade, which is why the United States has decided to take action now to reshape the global trade landscape.
For decades, successive U.S. administrations have relied on a false assumption: that our trading partners would proactively pursue policies that would help balance the global economy. But the reality is that the United States has long suffered from large and persistent trade deficits under an unfair trading system.
Deliberate policy choices by other countries have hollowed out America’s manufacturing base, 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 large and persistent imbalances simply cannot continue. They are unsustainable for the United States, and in the long run, for other economies as well.
I know that "sustainability" is a very popular word these days. But I'm not talking about climate change or carbon footprint. I'm talking about economic and financial sustainability - the kind of stability that actually improves people's lives and ensures that markets function properly. If international financial institutions want to achieve their mission, they must make this kind of sustainability their sole focus.
Since President Trump announced his tariffs, more than 100 countries have reached out to us to express their desire to be part of the process of rebalancing global trade. These countries have been very responsive and open to the President’s call for a fairer international system. We are engaging in constructive dialogue with them and look forward to engaging with more.
China in particular needs to rebalance. The latest data shows that China's economy is moving away from consumption-driven and towards manufacturing-dependent growth. If the status quo continues, China's growth model, which is dominated by manufacturing exports, will only exacerbate the imbalance with its trading partners.
China's current economic model is essentially to "pass on" its own 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 knows it must change. The whole world knows it. And we want to help because we need to rebalance ourselves.
China could start by cutting export capacity and instead supporting domestic consumers and the domestic market. This shift would help achieve the much-needed global rebalancing.
Of course, trade is only part of the global economic imbalance. The long-term dependence of the global economy on US demand has made the entire system increasingly unbalanced.
Policies in some countries have encouraged excessive savings, stifling private-sector growth, while in others they have kept wages artificially low, similarly limiting growth. These practices have increased global dependence on U.S. demand and made the entire world economy more vulnerable than it should be.
In Europe, former European Central Bank President Mario Draghi has clearly identified the multiple causes of economic stagnation and put forward a series of countermeasures. European countries should take these suggestions seriously.
I commend Europe for taking the first, belated but necessary steps now, which will provide new sources of demand for the global economy, while also implying greater European responsibility for security.
I have always believed that global economic relations and security partnerships should complement each other.
Security partners are more likely to build structurally compatible, mutually beneficial economic systems. If the United States continues to provide security guarantees and open markets, our allies must make a stronger commitment to collective defense. Europe’s latest actions on fiscal and defense spending are examples of how the Trump administration’s policies are beginning to work.
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 United States’ leadership in the global economic system, especially in the field of international financial institutions.
The IMF and the World Bank play a critical role in the international system. As long as they fulfill their missions faithfully, the Trump administration will fully cooperate with them.
But in their current state, both institutions fail to meet the standards.
The two major institutions of the Bretton Woods system must return to their core missions, away from the current state of multiple agendas and scattered objectives, which have weakened their ability to perform their fundamental duties.
Next, the Trump administration will further leverage the United States’ influence and leadership in these institutions to push 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 invite you to join us in refocusing the IMF and the World Bank on their core missions. This is in all of our interests.
International Monetary Fund (IMF)
First, we must make the IMF truly the IMF again.
The IMF's core mission is to promote international monetary cooperation, promote balanced growth in international trade, encourage economic development, and prevent harmful policies such as competitive exchange rate devaluations. These functions are vital to both the U.S. and global economies.
However, the IMF is now suffering from “mission drift”. This institution, once firmly 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 responsibilities, and this deviation has weakened its ability to handle core macroeconomic issues.
The IMF must become an institution that "tells the truth without mercy", not just to certain member countries. Unfortunately, the current IMF has chosen to "turn a blind eye". Its 2024 External Sector Report is titled "Imbalances are receding". This "blindly optimistic" judgment reflects an institution that is more committed to maintaining the status quo than raising critical questions.
In the United States, we know we must get our finances in order. The last administration ran the largest peacetime deficit in American history, and the current administration is working hard to reverse that.
We welcome criticism, but we cannot accept the IMF's silence on those countries that deserve the most criticism, especially those with chronic trade surpluses.
Under its core mandate, the IMF must call out countries, such as China, that have a long history of policies that distort the global economy, manipulate their currencies and are opaque.
I also expect the IMF to sound the alarm about irresponsible lending by some creditor countries. The IMF should be more proactive in pushing official bilateral creditors to intervene early and coordinate with borrowing countries to shorten the duration of debt distress.
The IMF must refocus its lending function, concentrate on addressing balance of payments problems, and ensure that its lending is temporary in nature.
When responsibilities are clear and operations are done properly, IMF lending is at the heart of its contribution to the global economy: When markets fail, the IMF can provide support; in exchange, borrowing countries are required to implement economic reforms to address imbalances and promote growth.
The changes brought about by these reforms constitute one of the IMF's most important contributions to building a strong, sustainable, and balanced global economy.
Argentina is a prime example. Earlier this month, I visited Argentina to demonstrate U.S. support for the IMF’s efforts to help the country’s fiscal restructuring. Argentina deserves IMF support because it has made real progress toward meeting its fiscal benchmarks.
But not all countries deserve the same treatment. The IMF must be held accountable to countries that fail to implement their reform commitments and say "no" when necessary. The IMF is not obliged to lend to countries that refuse to reform.
The success of the IMF should be measured by the ability of 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 roots.
The World Bank Group is committed to helping developing countries grow their economies, reduce poverty, attract private investment, create private sector jobs, and reduce reliance on foreign aid. It provides transparent, affordable, long-term financing to support countries' own development priorities.
Like the IMF, the World Bank provides extensive technical support to low-income countries to help them achieve debt sustainability, which enables these countries to better deal with coercive and opaque loan terms from other creditors.
These core functions complement the Trump Administration’s efforts to advance 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 respects.
It should no longer expect a blank check through flashy, buzzword-filled propaganda, nor should it shirk its responsibilities with vague promises of reform.
In returning to its mission, the Bank must use its resources more efficiently and effectively and create tangible value for all its member countries.
Currently, one of the key directions for the World Bank to improve resource utilization 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 jointly launched by the World Bank and the African Development Bank aims to provide reliable electricity to an additional 300 million people in Africa, which is a commendable effort.
But the World Bank must also further respond to the energy priorities and actual needs of various countries, focusing on reliable technologies that can truly support economic growth, rather than blindly pursuing distorted climate finance indicators.
We applaud the World Bank’s recent announcement that it will lift its ban on support for nuclear energy. This shift has the potential to revolutionize the energy mix in many emerging markets. We encourage the Bank to move forward and provide countries with equal access to all technologies that can provide affordable, stable, and basic electricity.
The World Bank should remain technologically neutral and prioritize “affordability” in its energy investments.
In most cases, that means investing in natural gas or other fossil fuel-based energy projects; in other cases, it includes renewable energy projects equipped with storage or dispatch systems.
Human history tells us a simple truth: sufficient energy can bring economic prosperity.
Therefore, the World Bank should advocate a "multi-pronged" energy development path. Such an approach will not only improve 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 access, the World Bank can also use resources more efficiently by implementing its “graduation policy”.
The policy aims to direct more of the bank's lending resources to the poorest, least creditworthy developing countries, where the bank's support will have the greatest impact on poverty reduction and growth.
However, in reality, the World Bank still provides loans every year to countries that have already met the "graduation" criteria. This continued lending lacks a legitimate reason, squeezes resources for high-priority projects, inhibits the development of private capital, and weakens the motivation of these countries to break away from their dependence on the World Bank and turn to a path of employment growth driven by the private sector.
Looking ahead, the World Bank must set clear exit timelines for 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".
To be sure, China’s rise has been impressive, albeit in part at the expense of Western markets. But if China wants to play a role in the global economy commensurate with its power, it must also graduate.
We welcome this.
In addition, the World Bank should promote transparent procurement policies based on "best value" to help countries break away from a procurement model that is solely guided by the "lowest price" bid.
“Low price only” procurement often encourages industrial policies that rely on subsidies and distort markets; it can suppress the development of private enterprises, encourage corruption and collusion, and ultimately raise overall costs.
In contrast, a procurement policy guided by “best value” is a better choice from both the efficiency and development perspectives; and its strong implementation will truly benefit the World Bank and its shareholder countries.
On this subject, I would also like to make the clearest statement on procurement policy for Ukraine reconstruction aid: Any organization, no matter who it is, that has ever provided funding or supplies to the Russian war machine is ineligible to apply for funding from the Ukraine reconstruction fund. No exceptions.
Conclusion
Finally, I would like to reiterate my sincere invitation to our allies - please join us in rebalancing the international financial system and returning the IMF and the World Bank to their original mission.
“America First” does not mean that we will withdraw, but it means 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 shared interests of the United States and all participating nations.
We look forward to working with you towards this common goal.
Thank you everyone!
Question and Answer Session:
Tim Adams:
Minister, thank you for your wonderful speech and thank you all for coming today. The sentence "America First does not mean America Alone" was very powerful and it can be said that many people present were relieved. So can it be understood that as long as these international organizations return to their original intentions and focus on the right things, the United States will continue to participate in them?
Bessant:
Absolutely. I made it very clear during my confirmation hearing: the United States should actively participate in these international multilateral institutions - not just participate, but make a difference and win results in them. This is not just for ourselves, but for the world.
Tim Adams:
You mentioned rebuilding the global financial order. In fact, 20 years ago, a senior Treasury official also said that the IMF was "incapable of dealing with global imbalances," but since then, every finance minister has had different priorities. So how would you do it differently? What are the specific concepts and practices?
Bessant:
The first thing is to clarify the focus. We need to reset the direction and measurement standards of these institutions and return them 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 20 to 30 years. Some countries may still think they can wait another 100 years, but we don't have that time.
Tim Adams:
In this regard, C is the key point that cannot be avoided. You will also meet with your Chinese counterparts soon. Is there any way to make them realize that more discussions are not as good as doing something practical?
Bessant:
In fact, there is no need to explain the reasoning. They know it in their hearts, but they lack the external impetus and motivation to implement it. I went to Japan for the first time in 1990, when the economic bubble had just burst. In 2012, I met Shinzo Abe, who was preparing for the election. He quickly launched "Abenomics". Ten years later, the Japanese economy recovered significantly. I believe that my Chinese counterparts will also realize this.
I have said before that we have the opportunity to reach a grand agreement between the United States and China: the United States will reshape the trade balance by strengthening manufacturing, and China will reduce its reliance on exports and move more towards a "domestic circulation". If China is serious about moving in this direction, we can work together. Of course, as you said, the core of all this is that we have to control our own finances. The current US deficit accounts for 6% of GDP, which is not a long-term solution.
Tim Adams:
Could you elaborate on how important it is to include fiscal adjustment in the global rebalancing framework?
Bessant:
This is a crucial link. Most of you here have received systematic economic training and understand that trade deficits come from three key factors: the first is 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 "attractiveness" of imported external goods, which 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 its value is determined by the market. The so-called strong dollar does not refer to the high or low price, but to winning the favor of capital and the confidence of the market through a sound policy.
Our problem is not insufficient revenues, but excessive spending. I advise President Trump to keep the long-term deficit to about 3% of GDP, matching it with 2% inflation or nominal growth, and achieve higher growth with good policies.
Tim Adams:
You've brought up the idea of the "dollar privilege" that was coined by Bob Rubin and Valéry Giscard d'Estaing in the 1960s. Some see it as a burden rather than a privilege. How do you see the dollar's status as the world's reserve currency? Will it fade over time?
Bessant:
I believe that the US dollar will remain the world's number one reserve currency in my lifetime. And to be honest, I don't think any country really wants to replace it. The euro was once highly anticipated, but it has appreciated too quickly recently and has become a burden to the export-oriented economy. To maintain the status of the US dollar, the key is to rebuild trust in international institutions.
Tim Adams:
You just visited Europe not long ago, and many people feel that Europe is in the process of a "revival". What do you think? Is this a good opportunity for Europe to take on more global demand?
Bessant:
It is indeed a good opportunity, but there are also many challenges. I have to say that we should thank President Trump for getting many European leaders to do what they have not been able to do in the past 26 years: convince Germany to increase fiscal spending to boost the European economy. This is both a fiscal stimulus and a way to share 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 fully support it. I recently had a private conversation with the Spanish Finance Minister, and he is very confident about the EU's future military spending, which I am also very sure of.
Tim Adams:
Minister, you are currently promoting many priorities at the same time: rebalancing between China and the United States, opportunities in Europe, and rebalancing domestic demand in the United States (including the fiscal deficit). So what are your specific expectations for the IMF going forward? What do you hope Ms. Georgieva and her board of directors will do?
Bessant:
In a word: return to the basics. The IMF has indeed gone astray in recent years, with too many and too complicated issues. It needs to "weed out" and refocus on the core tasks of balance of payments and balanced growth, while setting clear goals and achievement measurement standards.
Tim Adams:
Let's talk about energy. You mentioned nuclear energy in your speech. The United States is now the world's largest oil producer, producing about 13 million barrels per day. In what areas should we work harder in the future? How can the World Bank better support fossil fuels, nuclear energy and other forms of energy?
Bessant:
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". Real sustainable development must start with basic power supply. Some people are still obsessed with fantasy, thinking that renewable energy can solve the problem once and for all, but the reality is that water pumps must be turned on, electric heaters must be turned on, and hospitals must have power outages. Even middle-income countries like South Africa are still 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, rather than letting renewable energy be the first to launch, causing the industry to be unable to operate normally.
Tim Adams:
Finally, let’s talk about financial intermediaries. Capitalism without capital is just an empty “ism”, and the US capital market and financial intermediaries are crucial both internally and externally. What is your vision for future regulation? How should this industry develop in the future?
Bessant:
Private lending has been a hot topic recently. I think it represents the diversification of the U.S. financial system, but it is now operating partially outside of regulation, partly because of the tight regulation after the 2008 crisis, which squeezed the space for traditional financial institutions. We plan to build a more flexible and resilient regulatory framework with the help of the Financial Stability Oversight Council (FSOC), the Federal Reserve, the Office of the Comptroller of the Currency and the Federal Deposit Insurance Corporation (FDIC), to stimulate the vitality of compliant finance. One of the unique features of U.S. finance is that there are a large number of community banks and small and medium-sized banks, which provide 70% of agricultural loans, 40% of small and micro loans and housing loans nationwide. In most other G7 countries, a few large banks have the final say. In the past, Wall Street led everyone forward, but now it is time for Main Street to share the fruits. Many small banks have shrunk due to regulatory pressure over the past decade, and the real economy has stagnated. We are determined to fix this.
Tim Adams:
Thank you again. The Ministry of Finance has always been the "voice of sober reason", and it is this voice of reason that you have heard today. I wish you all the best! Let us thank the Minister of Finance again with warm applause!
