The economic relationship between the United States and China “provides tremendous benefits” to both nations, US Treasury Secretary Tim Geithner said on Wednesday.
“China presents enormous economic opportunities for the United States and for the world,” said Geithner at the Johns Hopkins University in Washington ahead of Chinese President Hu Jintao’s state visit to the United States next week.
“This state visit takes place at a time of important transition for the world economy, for the Chinese economy and, of course, for the American economy,” Geithner said.
Geithner indicated that the visit comes against the backdrop that the global economy is facing new dynamics of growth because of the financial crisis and global economic slowdown.
The global economy is emerging from the financial crisis, but the crisis has left lasting scars that will take years to repair and it has left a growing gap between the growth trajectories of the large developed economies and the rapidly growing emerging economies, he said.
“These growth dynamics,” he said, “will fundamentally change the balance in the world economy forcing changes in the architecture of the trade and financial systems.”
Talking about US economic relationship with China in the context of the changing global economy, Geithner said that “even though we compete in many areas, our economic strengths are largely complementary.”
The secretary said that China faces a very complicated set of challenges. “But It is very much in our interest and the world’s interest that China manage these challenges successfully,” he said.
Geithner stressed that the prosperity of Americans depends overwhelmingly on the economic policies they pursue to strengthen American competitiveness.
“Even as we work to encourage further reforms in China we need to understand that our strength as a nation will depend not on choices made by China’s leaders but on the choices we make here at home,” the secretary said.
“Fundamentally, how many jobs and how much wealth we create will be the result of the choices we make in the United States — not the choices of others,” he said.
Geithner noted that over the past few decades, China has emerged as a major economic force and it was benefiting from the US economy. The relationship between the two major economies in the world is deeply interdependent.
“China needs the United States, but the United States also benefits very substantially from our rapidly expanding economic relationship with China,” said Geithner.
In 2011, the US is on track to export more than $100 billion worth of goods and services to China, said Geithner.
“Our exports to China are growing at twice the rate of our exports to the rest of the world,” he said. “We have a great deal invested in each other’s success.”
The Secretary acknowledged that the Chinese government has adopted a comprehensive program of reforms to rebalance the economy and shift growth to domestic demand.
“This transition will take time, but it is already having a major impact on the shape of Chinese growth, and providing increased opportunities for American companies,” he said.
Geithner said that although there are challenges and friction, China’s rise offers the US the opportunity of dramatic growth in demand for things Americans create and produce.
“We should welcome both the opportunity and the challenge,” he concluded.