CCTV.com - CNTV English - CCTV News

Exclusive interview: Former US Treasury Secretary Henry Paulson to upgrade economic relations between China and US

07-19-2012 11:43 BJT Special Report: People Gallary |

Henry Paulson, former US Treasury Secretary

Related reading

China still has considerable room in which to adjust economic policy and won't face a "hard landing" this year, former US Treasury secretary Henry Paulson said on Tuesday.

Just back from a trip to China, the man who led President George W. Bush's 2008 bailout of Wall Street shared observations about the country and his new blueprint for upgrading economic relations between the world's two biggest economic powers.

"There's no doubt that the economy has slowed down significantly, and in a number of areas, really slowed down," Paulson said in an address at the Atlantic Council, a think tank in Washington. "My own best judgment is that we're not going to see a hard landing," he added.

Economists describe a hard landing as a severe slowdown or even contraction into recession of a country's gross domestic product, following a period of rapid growth. The cause is often a government's attempts to control inflation by tightening the money supply. Last week, China reported that its economy grew 7.6 percent in the second quarter, the lowest rate in more than three years.

On Monday, the International Monetary Fund lowered its estimates for Chinese growth for this year and 2013, warning of the possibility of a hard landing in the medium term for the world's No 2 economy. The IMF dropped its forecast for this year's GDP growth to 8.0 percent from its forecast of 8.2 percent in April. It also cut its estimate of next year's growth rate to 8.5 percent from 8.8 percent previously.

Paulson, who met with dozens of government and business leaders on his recent trip, said Chinese have recognized and begun to address problems posed by the overheated real estate market and inflation. "There is a lot of room in their economy - unlike ours - to respond positively to monitor the economy, loosening up lending and so on," he said. "I will be quite surprised if they don't grow somewhere between 7.5 to 8 percent this year."

But the bigger challenge for China will come three to five years from now, when its growth model, which is mainly driven by investment, exports and consumption, is "running out of steam" and reforms are lagging. The former top executive of Goldman Sachs Group Inc who as Bush's Treasury secretary oversaw the rescue of it and other Wall Street banks, is now in academia.

In 2011, he founded the Paulson Institute at the University of Chicago with an initial emphasis on strengthening the US-China relationship through trade and investment. He has written A New Framework for US-China Economic Relations, a tract that urges the two countries to maintain close economic ties, even as a US consensus supporting this is eroding after more than 40 years.

He recommends that Washington and Beijing push through reforms to adjust to new conditions. "Our best interest is having a constructive relationship with China," he said during the talk at the think tank. "There is a great opportunity in the economic area to break ground and do things that will benefit our economy, the global economy and China. "For our part, the United States needs a level playing field in China," Paulson's report adds. "But we would benefit, too, from more investment from China."

The US needs to ensure greater openness to Chinese investment, grant China market-economy status on a sector-by-sector basis and reform its outdated export control system, he wrote. Pointing out that China has been investing heavily abroad since 2009, Paulson believes this trend will accelerate over the next decade and that it's in the interest of the US to garner a "fair share" of Chinese investment cash.

But the US is "lagging way behind" in attracting capital from Chinese investors, he said, because "they feel unwelcome here" and "are confused by the different regulatory constraints and are put off by them".

For its part, China should pursue reforms to make the yuan a currency whose value is determined by the market, open up its capital markets, increase transparency and enforce intellectual-property commitments, Paulson writes.

Editor:James |Source: CNTV

Hot Videos view more

The celebrations are still continuing as the victorious coach, Joachim Loew, has been honored for his achievement in his hometown of Freiburg.
Germany coach Loew honored in hometown of Freiburg

Chinese men´s national team continued its preparations for next year´s Asian Cup, as they managed a one-all draw against visitors Jordan during a football friendly in Harbin, the capital city of Northeast China´s Heilongjiang Province.
China held to 1-1 draw by Jordan

The defending world champs came into the contest with a perfect 6-and-oh record, but they would be in for a tough first half before opening things up in the second.
USA beat Slovenia 119-76 in quarter-finals

Hot Stories more

UK authorities believe killer of James Foley is a British national

Across the UK the hunt is on for James Foley’s killer, who authorities believe is a British national. As Richard Bestic reports from London, Prime Minister David Cameron cut short his summer break to lead his government’s response.

Israeli war jets renews Gaza strike as truce talks stalled

Three Palestinians were killed and 40 others wounded in the intensive Israeli war jets´ airstrikes on the Gaza city on Tuesday night, shortly before an end of a 24-hour ceasefire in the Gaza Strip,

Missouri police arrest dozens after violent night

As the protests in the town of Ferguson, Missouri turned violent with police facing ´heavy gunfire´ from some ´criminal elements´, cops fired tear gas, stun grenades and arrested 31 demonstrators on Monday night.

Picture in news more

More Video News

Choose TV Program