ROBERT SIEGEL, host:
This evening, Secretary of the Treasury Timothy Geithner is holding a working dinner with Chinese Vice Premier Wang Qishan, in advance of tomorrow's summit. Two key issues likely to come up: U.S. concerns about Chinese currency policies, and intellectual property.
Earlier today, I spoke with Secretary Geithner at the Treasury Department. Secretary Geithner, welcome to the program.
Sec. TIMOTHY GEITHNER (Department of Treasury): Nice to see you.
SIEGEL: President Obama has described China's undervalued currency as a real issue. You've observed recently that the Chinese currency is rising, after inflation, at an annual rate of about 10 percent. Does that mean that you're satisfied, and the Treasury is satisfied, with what the Chinese are doing about the value of the yuan?
Sec. GEITHNER: We think they should move faster. We think it'd be good for China and good for us, good for China's trading partners for them to move faster. Because what that does is it gives - makes it easier for China to manage their inflation pressures; makes it easier for China to encourage their companies to produce things that'll help make China stronger in the future. And for any country that trades with China, it removes an unfair competitive advantage.
SIEGEL: But do they see it that way? Do they intend to continue letting the value rise?
Sec. GEITHNER: I believe they do. And I think they will - again because fundamentally, it's in their interest to do so.
SIEGEL: Senator Charles Shumer, of New York yesterday, predicted that Congress will pass legislation this year on Beijing's exchange rate policy. And he said: The time for talk is over; we've had enough of China's empty verbiage. Would you welcome congressional involvement in this issue?
Sec. GEITHNER: Well, Congress clearly cares a lot about this issue, as they do. And they're reflecting a broad concern across the business community, labor groups, 'cause there's a broad sense of unfairness about China's practice in this area. So again, they're reflecting a broad sense of concerns -understandable they have that concern.
SIEGEL: But does it help you to say to your counterparts, look, I've got the Congress breathing down our neck here about your devaluation?
Sec. GEITHNER: I actually think it's helpful for China to understand, this is a big issue for Americans, just like it's a big issue for all of China's trading partners. So in that sense it's helpful, yes.
SIEGEL: How much does this argument over whether the yuan is undervalued - how much does that account for our trade imbalance with China as opposed to other - say, other obstacles to Americans doing business in China?
Sec. GEITHNER: Well, the big reason we have a trade imbalance in China is because we're a very large economy. We're about three times as large as China. We're about six times richer than China. So for those reasons, we buy more goods from China than we export to China. Now, that's going to change over time as China grows more rapidly and as China becomes a larger economy, a richer economy, so they buy more from us.
Already, it's important to know that we exported about $100 billion of goods and services to China last year. Our exports to China are growing about twice the rate at which we're selling things to the rest of the world. This is soy beans and aircraft; it's high-tech goods; it's manufacturing goods across the American economy as a whole.
You know, we're very, very competitive as a country in things China needs to grow. Our companies are going to be a - play a big part in China's future growth. That's going to mean more jobs in the United States. What we want to do is just to make sure that we see more of that sooner.
SIEGEL: Are the Chinese generally treating American business fairly when they do business there?
Sec. GEITHNER: Well, I think it's getting better. But U.S. companies face a variety of obstacles, challenges competing in China. China has very poor protection for intellectual property. So, for example, computer software made by the great American companies is systematically vulnerable to theft in China.
Chinese company - China creates a bunch of advantages and preferences, subsidies to its domestic producers that tend to hurt U.S. companies. Those things are things that need to change over time.
Again, it's important for China to change 'cause, you know, you're not going to be able to encourage your own people to innovate if you don't protect their intellectual property.
SIEGEL: But how might that change - that is, what are you looking for? Are you looking for Chinese statement of policy that they will respect intellectual property rights; new laws, enforcement?
Sec. GEITHNER: All those things. What we've been trying to do is to get China to state that they're going to change these policies that disadvantage U.S. companies, to enforce those new commitments, to make sure they translate into change in behavior on the ground.
These things take time. They're not going to happen overnight. But you have to start with a broad commitment of policy, and that needs to be reinforced with concrete measures to make sure that, for example, Chinese state-owned enterprises are paying for the intellectual property that they use.
SIEGEL: When you say these things don't happen overnight - I mean, it sounds like, at least to American ears, fairly self-evident proposition that if somebody made the movie or developed the software or recorded the music, they have rights to that. Are you still at that elementary level with the Chinese?
Sec. GEITHNER: No, I think they understand this is important for China, too. And they passed a set of laws that provide greater protection. But those laws are not enforced yet on a level and a scale that would give us the kind of protections we need.
SIEGEL: What do you say to Americans who hear our various complaints about Chinese behavior and policies? They look at China holding a multitrillion-dollar share of our debt and say, we're going to lose these arguments 'cause they're in the driver's seat.
Sec. GEITHNER: No, I don't agree with that at all. Again, China needs very much the things that are - that only the U.S. can provide. You know, we're a very large market for their goods and services. They need and want more access to high technology across the board. They want more opportunity to help to buy American companies, to invest in the United States. Those are things very important to China's capacity to grow in the future. And it's helpful to remind people of that.
SIEGEL: In meetings with the Chinese, the tone of them: Are we talking as two friendly nations? Are we two competitive nations? What's the mood in the room when you sit down with your counterparts?
Sec. GEITHNER: You know, it's very candid. We're very direct with them with the things that they're doing that concern us.
SIEGEL: Candid and direct usually aren't positive words in these contexts.
Sec. GEITHNER: No, there I disagree. I think there's a certain maturity, and I'll tell you a little story. When I was in college, I studied in China twice, learning Chinese just as China was opening up to the rest of the world - this was back in 1980.
I remember walking around some market in Beijing at that point. And some Chinese guy in the street came up to me and said, are you American? I said, yeah, I'm American. He said, thank goodness you're American. He said, you Americans, you're like us. You're an optimistic country; you're a candid country; you're very direct and you're very confident. We have that in common and it makes for a good, productive, direct exchange on these things.
SIEGEL: Secretary Geithner, thank you very much for talking with us.
Sec. GEITHNER: Nice to see you.
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