WEBVTT - Janet Yellen Talks Soft Landing, China Relations 0:00:02.440 --> 0:00:06.760 Bloomberg Audio Studios, podcasts, radio news. 0:00:07.080 --> 0:00:09.440 Thank you all for being here. It's a real pleasure. 0:00:10.200 --> 0:00:11.840 If someone ha said to me, you're gonna interview the Treasury 0:00:11.840 --> 0:00:14.040 Secretary and a church, but not have been on my 0:00:16.280 --> 0:00:20.760 not have been on my bingo card. I also recognize 0:00:20.960 --> 0:00:23.960 there's a major football game happening at this particular time. 0:00:26.000 --> 0:00:30.720 Greatful we could be here as well. Secretary Yell needs 0:00:30.720 --> 0:00:33.760 no introduction. I'll very quickly run through the pertinent biography. 0:00:34.760 --> 0:00:38.800 She has the trifecta Treasury Secretary, former Federal Reserve Chair, 0:00:39.200 --> 0:00:43.360 chief Economic advisor to President Clinton as well, and along 0:00:43.400 --> 0:00:46.519 the way, president of the Federal Reserve Bank of San Francisco. 0:00:47.320 --> 0:00:49.800 The accolades are many of the CV is long. We 0:00:49.800 --> 0:00:51.559 can move past it quickly, and before we get to this, 0:00:51.680 --> 0:00:54.480 there's a lot to talk about before we. 0:00:54.440 --> 0:00:55.760 Get to that. Some light fare. 0:00:56.520 --> 0:00:59.680 And I use the pun intentionally when I said to 0:00:59.760 --> 0:01:02.240 friends I was interviewing you. Everyone is interested in where 0:01:02.280 --> 0:01:04.720 you go to eat on these trips, and I noted 0:01:04.760 --> 0:01:10.080 here in Austin, one in a million wa a Burger. 0:01:12.520 --> 0:01:13.680 And I have to ask. 0:01:13.520 --> 0:01:15.440 About that because there was such a frenzy when you 0:01:15.440 --> 0:01:18.640 went to California, and stopped it in an out burger, 0:01:19.120 --> 0:01:20.240 And let's create a little contrary. 0:01:20.319 --> 0:01:26.080 Let's have a hard conversation. How was the burger? 0:01:26.400 --> 0:01:33.080 They're both terrific in different ways, and loved that it 0:01:33.200 --> 0:01:33.800 was excellent. 0:01:33.920 --> 0:01:36.240 I promise my editor would make some headlines here today. 0:01:37.040 --> 0:01:39.800 We're going to try to barbecue before we leave excellent. 0:01:41.040 --> 0:01:42.440 I'm not gonna let that go by. 0:01:44.360 --> 0:01:46.480 Let's start a bit by talking about the economy. I 0:01:46.480 --> 0:01:48.320 had the pleasure of tagging along with you yesterday. You 0:01:48.400 --> 0:01:53.160 visited an IRS processing facility here in Austin. We saw 0:01:53.160 --> 0:01:54.880 a lot of sorting machines. You asked about your tax 0:01:54.920 --> 0:01:59.120 returns from nineteen seventy one, if they still have them. 0:01:59.560 --> 0:02:01.320 And after I had a chance to ask you about 0:02:01.360 --> 0:02:04.840 the latest jobs data and about the economy one hundred 0:02:04.840 --> 0:02:08.200 and forty two thousand jobs at it last month downward 0:02:08.240 --> 0:02:10.600 revision of the jobs numbers that we've seen prior to that, 0:02:11.160 --> 0:02:14.040 unemployment rate catching down slightly to four point two percent. 0:02:15.120 --> 0:02:19.120 You told me afterward, the labor market looks healthy to you. 0:02:19.200 --> 0:02:21.840 There will be a lot of people who wonder about that, 0:02:22.960 --> 0:02:25.720 wonder about how the economy is doing, the jobs market 0:02:25.840 --> 0:02:28.960 is doing, in particular, given this prolonged fight the FED 0:02:29.000 --> 0:02:31.519 has been having against high inflation and worry about the consequences. 0:02:32.280 --> 0:02:34.640 Explain why you feel like it is healthy yet. 0:02:35.440 --> 0:02:37.760 So, what I see when I look at it the 0:02:37.840 --> 0:02:45.520 economy broadly speaking, is very strong growth, deep into a recovery, 0:02:45.600 --> 0:02:49.799 with the economy operating it basically at full employment. We're 0:02:49.880 --> 0:02:54.280 still seeing three percent growth roughly over the last year, 0:02:54.280 --> 0:03:03.000 and it continues. Consumers spending, investment, spending, solid, inflation coming 0:03:03.120 --> 0:03:08.400 down substantially and I believe headed back to the feds 0:03:08.480 --> 0:03:12.120 two percent goal. And what I describe is a strong, 0:03:12.280 --> 0:03:18.520 solid labor market. Clearly, the pace of job creation has 0:03:18.600 --> 0:03:24.040 gone down, and that's something we should expect. The unemployment 0:03:24.160 --> 0:03:28.560 rate has moved up somewhat off it's very low level 0:03:28.600 --> 0:03:31.880 of I think it got down to three point four percent, 0:03:32.680 --> 0:03:36.240 but it's not common in the United States to have 0:03:36.320 --> 0:03:38.000 unemployment rates in the foes. 0:03:38.680 --> 0:03:40.120 And it's what. 0:03:40.040 --> 0:03:46.720 I think of is a full employment economy. We're seeing 0:03:47.680 --> 0:03:53.400 continued decent pace of hiring, fewer job openings, a lot fewer. 0:03:53.400 --> 0:03:57.160 But there was an enormous amount of disruption in the 0:03:57.240 --> 0:03:58.320 labor market we. 0:03:58.240 --> 0:03:59.640 Saw during the pandemic. 0:04:01.160 --> 0:04:04.440 So the labor market is less hot than it was 0:04:04.720 --> 0:04:08.520 in the hiring frenzy that took place as the economy 0:04:09.000 --> 0:04:10.880 opened up after the pandemic. 0:04:11.640 --> 0:04:15.119 But one hundred and forty thousand jobs. 0:04:15.920 --> 0:04:20.440 This is what you expect in an economy where you 0:04:20.480 --> 0:04:25.000 don't have a lot of unemployment and jobs need to 0:04:25.040 --> 0:04:29.320 be created for new entrance to the labor force. So 0:04:29.600 --> 0:04:33.359 nobody knows exactly what that magic number is. What do 0:04:33.400 --> 0:04:36.920 you need to see in terms of monthly job creation 0:04:38.480 --> 0:04:42.400 to hold the unemployment rate steady? But my guess is 0:04:42.440 --> 0:04:46.919 we're seeing something in that region, and I think this 0:04:47.080 --> 0:04:52.320 is what most people would call a soft landing. Now, 0:04:52.560 --> 0:04:55.960 I will say when you see the pace of job 0:04:56.040 --> 0:05:00.320 creation diminishing over time, what I'd love to say see 0:05:00.360 --> 0:05:05.000 is that it stabilizes roughly where it is now, and 0:05:05.040 --> 0:05:08.680 we have to be careful to make sure that it's 0:05:08.760 --> 0:05:12.360 not going to weaken further. But when you think about 0:05:12.400 --> 0:05:17.360 what will drive at the pace of consumer spending, that's 0:05:17.440 --> 0:05:20.000 important and that remains quite solid. 0:05:20.240 --> 0:05:22.920 We're not seeing layoffs. We're seeing. 0:05:24.080 --> 0:05:28.800 Less frenzy in terms of hiring and job openings, but 0:05:29.000 --> 0:05:35.800 we're not seeing meaningful layoffs. Unemployment insurance claims remain at 0:05:35.920 --> 0:05:41.440 very low levels, so I'm attentive to downside risk now on. 0:05:41.480 --> 0:05:42.880 The employment side. 0:05:43.360 --> 0:05:48.400 But what I think we're seeing and hope we will 0:05:48.440 --> 0:05:51.840 continue to see, is a good, solid economy. 0:05:52.040 --> 0:05:53.919 You say, many people would call that a soft landing. 0:05:53.960 --> 0:05:56.599 So that is the FED being able to get high 0:05:56.600 --> 0:06:00.280 inflation under control without triggering a deep downturn or recession. Right, 0:06:01.240 --> 0:06:03.080 many people would say that. Do you say that as well? 0:06:03.080 --> 0:06:05.000 Do you think that it's Are you fairly confident that 0:06:05.000 --> 0:06:05.960 we're going to get done? 0:06:07.000 --> 0:06:09.920 I think what we're seeing now is consistent with that, 0:06:10.520 --> 0:06:15.280 And you know, while there are risks, it really has 0:06:15.320 --> 0:06:19.160 been amazing to be able to get inflation down as 0:06:19.279 --> 0:06:24.200 meaningfully as we have. And I'd say also, wages are 0:06:24.240 --> 0:06:29.760 going up at a decent clip, and real wages adjusted 0:06:29.839 --> 0:06:34.359 for inflation are rising, and they've well, a lot of 0:06:34.560 --> 0:06:37.880 especially low income households, are under stress. 0:06:38.480 --> 0:06:40.320 Aspects of the cost. 0:06:40.080 --> 0:06:44.920 Of living for them are genuinely challenging, and it's our 0:06:44.920 --> 0:06:49.839 administration's top priority to try to address that. It's still 0:06:49.920 --> 0:06:55.039 true that wages have gone up since before the pandemic 0:06:55.320 --> 0:07:00.479 in real or inflation adjusted terms, and continue youing to 0:07:00.600 --> 0:07:01.880 rise at a decent base. 0:07:02.720 --> 0:07:06.000 Economic policy makers just gathered in Jackson, holl Wyoming. You 0:07:06.040 --> 0:07:08.240 didn't go this year, You've gone in the past many times, 0:07:08.279 --> 0:07:10.760 and I was thinking as I watched. 0:07:10.480 --> 0:07:11.400 All of that unfold. 0:07:11.720 --> 0:07:16.200 You know, a big takeaway from that is, wow, policymakers 0:07:16.240 --> 0:07:18.080 have managed to pull this off, or so it seems. 0:07:19.040 --> 0:07:20.240 There hasn't been a recession. 0:07:20.640 --> 0:07:23.440 Inflation has come down dramatically, And I want to draw 0:07:23.440 --> 0:07:28.480 on your experience as an academic economist and a policy makers. 0:07:28.520 --> 0:07:31.000 What's the message from that to future policymakers about what's 0:07:31.000 --> 0:07:33.240 worked here? How much of this was I won't call 0:07:33.280 --> 0:07:36.560 it dumb luck, but fortunate that it happened. Are we 0:07:36.600 --> 0:07:38.800 any closer to understanding why it worked out the way 0:07:38.800 --> 0:07:39.240 that it has? 0:07:40.960 --> 0:07:46.840 So, you know, shocks occur to the economy, and sometimes 0:07:46.880 --> 0:07:51.320 they have very unique features. And so when you ask 0:07:52.160 --> 0:07:54.960 do we under what do we understand and what are 0:07:55.000 --> 0:07:59.400 the lessons? You know, each shock in each situation needs 0:07:59.440 --> 0:08:04.320 to be under stood in its own terms. And aside 0:08:04.560 --> 0:08:10.640 from typically wars where goods are in short demand and 0:08:10.720 --> 0:08:14.960 you see bursts of inflation. Fortunately there have been few, 0:08:15.120 --> 0:08:18.520 but there have been some episodes In the United States. 0:08:19.040 --> 0:08:21.360 This was a very unique episode. 0:08:22.120 --> 0:08:22.760 Some of the. 0:08:22.720 --> 0:08:27.080 Inflation came from supply side shocks. 0:08:27.040 --> 0:08:28.720 That were related to COVID. 0:08:30.240 --> 0:08:36.000 We found the automakers had just a shortage of semiconductors 0:08:36.040 --> 0:08:40.760 they couldn't get. They couldn't get the semiconductors they needed 0:08:41.200 --> 0:08:47.240 to produce cars, so things like cars were an absolute shortage. 0:08:47.880 --> 0:08:52.199 There was a huge change in the character of demand 0:08:52.920 --> 0:08:58.000 in the US economy associated with the pandemic. People no 0:08:58.040 --> 0:09:04.480 longer going out to eat in restaurants, cooking at home, 0:09:05.240 --> 0:09:12.079 working from home, wanting to expand and improve their work 0:09:12.280 --> 0:09:18.440 spaces their homes, pushing up house prices and rents, and 0:09:19.720 --> 0:09:25.120 demand for goods going through the ceiling to the point 0:09:25.200 --> 0:09:31.200 where we saw ships lined up in the major ports 0:09:31.280 --> 0:09:35.440 in California and other parts of the country couldn't unload 0:09:36.280 --> 0:09:39.800 their cargoes. So there were a lot of supply shocks, 0:09:39.880 --> 0:09:43.679 and that led to some steep price increases. Then we 0:09:43.720 --> 0:09:50.040 had Russia's attack on Ukraine that led to for a 0:09:50.080 --> 0:09:53.920 while spiking energy and commodity prices. 0:09:54.559 --> 0:09:55.480 And part of. 0:09:55.440 --> 0:10:00.000 What we've seen is inflation come down as the economy 0:10:00.120 --> 0:10:03.320 is adjusted to those shocks, and I think that's part 0:10:03.360 --> 0:10:09.439 of why we haven't needed to have a recession. You know, 0:10:10.280 --> 0:10:14.400 when the fed Titans and causes it causes the recession. 0:10:15.400 --> 0:10:20.080 It's often because the labor market itself has become overheated 0:10:20.800 --> 0:10:24.440 and they feel they need to loosen up the labor 0:10:24.520 --> 0:10:28.320 market in order to get inflation down. And we did 0:10:28.400 --> 0:10:31.600 see a very tight labor market for a while, but 0:10:31.840 --> 0:10:39.320 it's gradually cooled in a way that should not necessitate 0:10:40.000 --> 0:10:44.600 a recession. Wages are rising a little bit under four 0:10:44.679 --> 0:10:50.640 percent at a pace that is consistent with two percent 0:10:50.760 --> 0:10:56.880 inflation and significant productivity growth. So all of that looks 0:10:57.520 --> 0:11:02.040 all of that looks good. So this has been a 0:11:02.160 --> 0:11:07.160 unique thing, you know, I think when I think about lessons, 0:11:07.520 --> 0:11:14.160 one of the lessons that my colleagues and I had 0:11:14.679 --> 0:11:18.840 in responding to the pandemic is we know, when you 0:11:18.960 --> 0:11:22.520 have a deep downturn in the economy, if you don't 0:11:22.640 --> 0:11:27.040 do something to address unemployment, it can leave. 0:11:27.280 --> 0:11:30.479 People out of the labor market. 0:11:30.280 --> 0:11:34.360 Out of jobs, scarred in ways that will have a. 0:11:34.400 --> 0:11:36.960 Permanent impact on their lives. 0:11:37.440 --> 0:11:42.640 And getting people back to work is important in order 0:11:42.800 --> 0:11:45.040 to avoid. 0:11:44.720 --> 0:11:46.120 This kind of scarring. 0:11:47.040 --> 0:11:51.000 And so we were very focused on trying to create jobs, 0:11:51.320 --> 0:11:54.679 and I really don't think that was a mistake at all. 0:11:55.120 --> 0:12:02.000 We've enjoyed about the fastest and larger recovery of any 0:12:02.040 --> 0:12:07.040 advanced country that's experienced this shock. And well, we did 0:12:07.080 --> 0:12:11.960 see a spurt and inflation, and you know, we're concerned 0:12:12.000 --> 0:12:17.400 about the cost of living. It's a high priority every country. 0:12:17.440 --> 0:12:19.880 So or a burst of inflation, it's something that was 0:12:20.679 --> 0:12:22.720 probably unavoidable. 0:12:22.040 --> 0:12:22.840 Given this shock. 0:12:23.200 --> 0:12:26.040 As I listened to you talk about catalysts for high inflation, 0:12:27.040 --> 0:12:28.880 you didn't mention companies. And I'm sure you've heard the 0:12:28.880 --> 0:12:32.400 conversation that's happening now about whether companies have been contributing 0:12:32.440 --> 0:12:35.680 to this. Are there mechanisms that could be put in 0:12:35.679 --> 0:12:38.440 place to deal with price gouging? Let me ask you, 0:12:38.480 --> 0:12:40.200 as an economist, do you think that that is a 0:12:40.240 --> 0:12:42.559 reasonable response and is it a necessary response at this 0:12:42.600 --> 0:12:43.240 point in time? 0:12:43.920 --> 0:12:47.960 So to me, inflation is largely ongoing a matter of 0:12:48.160 --> 0:12:54.080 supply and demand, but it is important to have competition 0:12:54.720 --> 0:13:01.880 in the economy and benefits to consumers very substantial from 0:13:02.960 --> 0:13:09.079 having an active anti trust policy. From our earliest days, 0:13:09.760 --> 0:13:15.640 the Biden Harris administration has been focused on enforcing existing 0:13:15.679 --> 0:13:21.600 anti trust policy to maintain competition in our economy, which 0:13:21.640 --> 0:13:23.480 benefits consumers. 0:13:24.040 --> 0:13:27.600 And so with respect to price gouging. 0:13:27.720 --> 0:13:31.319 It can be a lack of competition, or sometimes after 0:13:31.440 --> 0:13:36.000 a shock, you have a snow snowstorm and the price 0:13:36.040 --> 0:13:38.520 of shuffles can go up or slaves. 0:13:38.600 --> 0:13:41.199 As I know from having kids, sled sled prices tend 0:13:41.240 --> 0:13:44.080 to rise. You know, when the forecast calls for a snow. 0:13:44.760 --> 0:13:49.840 Forty states have laws against that. And that's that seems 0:13:49.840 --> 0:13:50.640 relevant to me. 0:13:51.840 --> 0:13:54.160 I'd like to talk about the work that you've done 0:13:54.160 --> 0:13:56.839 internationally and domestically kind of equal parts. And you know, 0:13:56.880 --> 0:13:59.880 I look at what you've done as Treasury Secretary. You 0:14:00.080 --> 0:14:03.120 approached it kind of like a diplomat. Treasury secretary is 0:14:03.120 --> 0:14:05.720 a diplomat, And I want to start by asking you 0:14:05.760 --> 0:14:09.600 about your experience on US China relations. So I didn't 0:14:09.600 --> 0:14:11.079 go on the trip with you there that you took 0:14:11.120 --> 0:14:12.959 to China, but I followed the coverage of it. And 0:14:13.840 --> 0:14:16.360 aside from the five thousand articles about the magic mushrooms 0:14:16.360 --> 0:14:17.920 that may have been on the meal that you that 0:14:17.960 --> 0:14:22.520 you ate there, she don't have to address here, and 0:14:22.520 --> 0:14:33.280 you've a dressed that money. There was this other thread 0:14:33.320 --> 0:14:35.880 that came out, and that is you were able to 0:14:35.920 --> 0:14:39.840 carry a tough message to your counterparts and they seem 0:14:39.920 --> 0:14:43.800 to if not like you, hear you out, spend time 0:14:43.800 --> 0:14:45.520 with you. These meetings, as they often do when you 0:14:45.560 --> 0:14:49.520 meet with counterparts in China, last almost days, they last hours. 0:14:49.560 --> 0:14:52.320 And I was thinking of something that I saw Alan 0:14:52.360 --> 0:14:54.280 Blind or your former colleague at the FED say about you, 0:14:54.320 --> 0:14:57.000 and that is Janet Yellen makes an argument on the merits, 0:14:57.000 --> 0:14:59.320 and she sticks with it, and she's good at articulating 0:14:59.360 --> 0:15:01.280 an argument in a way that doesn't leave people on 0:15:01.320 --> 0:15:05.040 the other side hopping mad at her. What is your 0:15:05.600 --> 0:15:08.200 secret as you think of embracing this role as a diplomat, 0:15:08.240 --> 0:15:11.720 what has made you particularly i'll say particularly good or 0:15:12.080 --> 0:15:12.960 have the facility for. 0:15:12.880 --> 0:15:17.320 Well, well, thank you for the compliment. I've seen. 0:15:19.040 --> 0:15:22.520 This sort of diplomatic initiative, both with China and with 0:15:22.640 --> 0:15:28.000 other countries as really critical because we need to work 0:15:28.000 --> 0:15:33.280 together collaboratively to solve every global problem that we face, 0:15:33.800 --> 0:15:39.920 from climate change to Russia's aggression to issues that we 0:15:40.040 --> 0:15:45.080 have with China. And during the previous administration, I'm sorry 0:15:45.120 --> 0:15:49.960 to say, our alliance is fred and you know it 0:15:50.040 --> 0:15:56.480 was America first, and that should really never be America alone, 0:15:56.840 --> 0:16:02.040 and it was necessary to rebuild alliances, is to work 0:16:02.080 --> 0:16:05.920 with allies around the world, and that's been a broad 0:16:06.200 --> 0:16:09.320 that's been a broad effort, and I think we really 0:16:09.400 --> 0:16:14.400 have succeeded. And perhaps we'll talk about this, but when 0:16:14.720 --> 0:16:20.360 Russia attacked Ukraine, we had an alliance that came together 0:16:21.000 --> 0:16:25.520 in a matter of a day or two to strongly 0:16:26.600 --> 0:16:32.080 counter what Russia was doing. We've stayed together and we've 0:16:32.640 --> 0:16:38.280 worked together to address and this is broad effort G 0:16:38.480 --> 0:16:45.880 twenty or larger, to address climate change and problems afflicting 0:16:46.520 --> 0:16:52.160 poor countries around the world, to address pandemics, created a 0:16:52.200 --> 0:16:57.920 pandemic fund, knowing there'll probably be another pandemic unfortunately, and 0:16:58.280 --> 0:17:01.760 we need to be better prepared we were for COVID. 0:17:02.160 --> 0:17:06.240 So on many different fronts, we have tried to rebuild alliances, 0:17:07.000 --> 0:17:13.520 and with respect to China, relations had really deteriorated during 0:17:13.520 --> 0:17:17.520 the pandemic, and we went for a period of close 0:17:17.600 --> 0:17:24.440 to two years without any meaningful senior level contact between 0:17:25.000 --> 0:17:31.240 US and Chinese, and that was really a very dangerous 0:17:31.320 --> 0:17:38.280 state of affairs. President Biden met with President she In Bali. 0:17:39.240 --> 0:17:42.639 I was at that meeting, and they agreed that it 0:17:42.720 --> 0:17:50.480 was important to re establish relationships, and that means having 0:17:50.520 --> 0:17:55.800 honest conversations about the things that we're concerned about. It 0:17:55.960 --> 0:18:02.080 could be, of course, for the defense. In foreign policy side, 0:18:02.640 --> 0:18:08.080 it's things like Taiwan and the South China see. For us, 0:18:08.200 --> 0:18:12.680 it's some of the tools that we think constitute unfair 0:18:13.200 --> 0:18:19.400 competition or macroeconomic policies that China is following that we 0:18:19.480 --> 0:18:23.879 see as having negative impacts on the United States and 0:18:23.920 --> 0:18:28.280 other countries. These are things we need to discuss, honestly, 0:18:30.480 --> 0:18:35.360 so we try to re establish relationships. Before I went 0:18:35.440 --> 0:18:42.280 to China, I set out three basic tenets for our relationship. First, 0:18:42.560 --> 0:18:47.840 that we have national security concerns, and we're really that's 0:18:47.880 --> 0:18:51.399 not an area where we can compromise. We intend to 0:18:51.480 --> 0:18:55.840 address those concerns. What we can do, though, and I've 0:18:55.880 --> 0:19:00.280 found that this has been helpful, is to explain carefully 0:19:00.359 --> 0:19:04.000 what those concerns are, to try to we dress them 0:19:04.160 --> 0:19:11.000 in the narrowest possible way so that addressing these concerns 0:19:11.520 --> 0:19:18.000 doesn't drift into taking actions intended to harm the entire 0:19:18.119 --> 0:19:23.480 Chinese economy or the Chinese people, and explaining how we 0:19:23.600 --> 0:19:28.399 have drawn those lines. Also giving the Chinese an opportunity 0:19:29.640 --> 0:19:33.720 if they feel we've gone too far and really broadly 0:19:33.800 --> 0:19:37.560 harming their economy, to explain what their concerns are and 0:19:37.640 --> 0:19:41.680 to respond and to listen and if you know, occasionally 0:19:42.560 --> 0:19:46.520 just something that we do because there's a legitimate concern there. 0:19:47.000 --> 0:19:48.200 So that was one tenant. 0:19:48.880 --> 0:19:52.920 The other is to say, look, we've got economic issues 0:19:52.960 --> 0:19:57.439 where we disagree, but what we agree on is we 0:19:57.560 --> 0:20:02.479 do have deep trade and investment relations with China, and 0:20:02.520 --> 0:20:09.640 that's benefiting many Americans. Americans who are involved in export industries. 0:20:10.080 --> 0:20:15.840 We're selling goods to China, people who have jobs with 0:20:16.040 --> 0:20:19.880 firms that are investing in China and operating in China. 0:20:21.320 --> 0:20:24.840 We benefit from much of the trade and investment that's 0:20:24.880 --> 0:20:28.400 going on. And it is not a zero sum game. 0:20:28.560 --> 0:20:32.439 It is a win win type of situation. But the 0:20:32.480 --> 0:20:35.080 trade and investment has to be fair, and we have 0:20:35.960 --> 0:20:42.600 grievances and one of the topics we're discussing intensively now, 0:20:43.560 --> 0:20:49.520 I guess I call it over capacity. China has a 0:20:49.640 --> 0:20:55.639 unique economy in which they are savings rate, so the 0:20:55.640 --> 0:21:00.320 amount of their GDP that they save is over forty percent. 0:21:00.520 --> 0:21:03.679 This is really rare. 0:21:05.080 --> 0:21:07.919 Among countries around the world. 0:21:07.960 --> 0:21:09.000 I don't know of any. 0:21:08.840 --> 0:21:15.240 Developed country with anything like that. Consumer spending is very low, 0:21:15.280 --> 0:21:18.920 as the share of the economy in comparison with any 0:21:18.960 --> 0:21:23.119 other country. And for a country that's trying to develop, 0:21:23.160 --> 0:21:26.919 having this huge pool of savings to invest, that's a 0:21:26.960 --> 0:21:31.679 great thing. And they invested in infrastructure, and they invested 0:21:31.720 --> 0:21:35.719 it in housing and property. But you know, there are 0:21:35.720 --> 0:21:38.560 only so many bridges and roads that it makes sense 0:21:38.640 --> 0:21:42.399 to build, and they did that, and they built a 0:21:42.400 --> 0:21:47.880 lot of houses and live incule with many or not 0:21:48.880 --> 0:21:51.880 many are unfinished, and there are a lot of problems there, 0:21:51.920 --> 0:21:55.080 and so it doesn't you're lived with forty percent of 0:21:55.119 --> 0:22:00.080 your economy. You're saving and what are you going to 0:22:00.240 --> 0:22:04.080 do with all those savings? And they've basically made a 0:22:04.160 --> 0:22:05.840 decision they want to channel. 0:22:05.640 --> 0:22:07.800 That into advanced manufacturing. 0:22:08.600 --> 0:22:11.000 And you know, there are a lot of countries, not 0:22:11.119 --> 0:22:15.080 just the United States, but Europe and developing countries like 0:22:15.160 --> 0:22:20.719 India or Brazil or Mexico that are producing and have 0:22:20.800 --> 0:22:25.040 good jobs in these industries, and when you have massive subsidization, 0:22:26.080 --> 0:22:30.000 it undercuts jobs in many places. So we need to 0:22:30.119 --> 0:22:35.240 discuss this in a sensible way, and we have and 0:22:34.200 --> 0:22:39.160 they're willing to listen. And you have set up working 0:22:39.240 --> 0:22:43.159 groups and economic and a financial working group. But the 0:22:43.280 --> 0:22:47.280 last piece of it is that we also need to collaborate. 0:22:48.160 --> 0:22:54.720 The world needs that from the two largest countries, and 0:22:55.160 --> 0:22:59.119 there are global challenges we face, like climate change or 0:23:00.200 --> 0:23:08.280 debt burdens in poor countries that are really stopping development 0:23:08.400 --> 0:23:13.920 dead in its tracks. We need our multilateral development banks 0:23:14.000 --> 0:23:19.240 to operate in a better and more efficient way to 0:23:19.280 --> 0:23:24.080 help poor countries round middle income countries around the world. 0:23:24.720 --> 0:23:27.240 And we need to work together on these things. 0:23:27.880 --> 0:23:34.000 Or if there is a financial crisis it spills across borders. 0:23:34.080 --> 0:23:38.000 We need to if something happens, be able to work together. 0:23:38.720 --> 0:23:41.320 And so we also agreed we're going to try to 0:23:41.320 --> 0:23:43.920 do that, and we've been doing this very effectively. 0:23:44.800 --> 0:23:47.959 Do you foresee going back there as Treasury secretary? Do 0:23:48.000 --> 0:23:49.000 you need to go back there? 0:23:49.800 --> 0:23:54.880 I certainly may go back there. I, you know, would 0:23:54.960 --> 0:23:59.960 welcome a visit by my Chinese counterpart, and my guess 0:24:00.200 --> 0:24:04.960 is that we will have, one way or another a visit. 0:24:08.200 --> 0:24:13.439 His team will be traveling very soon to China to 0:24:13.600 --> 0:24:16.840 discuss economic issues and carry this forward. 0:24:17.520 --> 0:24:19.680 One last question before we move on to Russia and Ukraine. 0:24:21.480 --> 0:24:24.960 You mentioned that relationship had deteriorated and frayed. You have 0:24:25.040 --> 0:24:26.840 knitted it back together so much as you've been able 0:24:26.880 --> 0:24:29.520 to how fragile is it is you look ahead to 0:24:30.000 --> 0:24:33.720 a new administration, whichever one that may be. As you 0:24:33.800 --> 0:24:36.240 listen to those who counsel for less engagement with China 0:24:36.320 --> 0:24:38.720 as opposed to more, how worried are you about the 0:24:38.720 --> 0:24:40.560 integrity of it and it kind of falling to the 0:24:40.600 --> 0:24:42.879 wayside in the way in which it had before. 0:24:44.400 --> 0:24:47.199 Well, I do think it's possible. I think this is 0:24:47.240 --> 0:24:50.800 something that needs to be prioritized. 0:24:49.800 --> 0:24:51.640 And nurtured, and. 0:24:52.920 --> 0:24:56.840 We need to continue to talk to one another at 0:24:56.880 --> 0:25:03.199 all levels, from the most senior down through staff of 0:25:05.040 --> 0:25:09.680 places like treasury, where there are lots of issues. They 0:25:09.680 --> 0:25:12.560 don't rise to the top level, but we need to 0:25:12.640 --> 0:25:16.120 work together. And as we saw it during the pandemic, 0:25:16.560 --> 0:25:20.119 and we have enough differences, and without a chance to 0:25:20.320 --> 0:25:25.720 discuss them and put them in context, it's certainly possible 0:25:25.760 --> 0:25:26.920 for tensions to rise. 0:25:27.000 --> 0:25:28.680 So this is something that. 0:25:28.640 --> 0:25:32.240 Really requires ongoing attention. 0:25:32.920 --> 0:25:34.680 I hope that it would get it. 0:25:35.840 --> 0:25:39.359 Pivoting to Russia and Ukraine, you mentioned how quickly and 0:25:39.440 --> 0:25:43.000 allies came together to impose sanctions and economic restrictions on 0:25:43.080 --> 0:25:47.879 Russia after its invasion of Ukraine. The US has imposed 0:25:48.200 --> 0:25:51.000 more sanctions under this administration than anyone in the past 0:25:51.000 --> 0:25:54.320 by a mile. And there are critics who say, maybe 0:25:54.320 --> 0:25:57.080 we've gone a little far down that road, maybe they're 0:25:57.080 --> 0:25:59.280 not as effective as you might hope. 0:26:00.040 --> 0:26:00.960 What do you say to them. 0:26:01.520 --> 0:26:04.119 It's a rare day when I go to my computer, 0:26:04.320 --> 0:26:07.720 open the inbox and don't see something from Treasury about 0:26:08.080 --> 0:26:11.919 sanctions on that particular conflict, maybe in South America. It 0:26:12.000 --> 0:26:14.000 is a tool that the Treasury Department, yes, under you, 0:26:14.040 --> 0:26:17.000 but under your recent predecessors as well, have been relying 0:26:17.080 --> 0:26:20.439 upon more this kind of financial warfare, economic warfare. 0:26:21.560 --> 0:26:25.360 Well, I think it can be a potent tool when 0:26:25.520 --> 0:26:29.560 used in the right context. You know, clearly there are 0:26:29.640 --> 0:26:34.679 cases where you use sanctions and you're not successful in 0:26:34.760 --> 0:26:39.200 stopping activity that you'd like to punish. You know, perhaps 0:26:39.240 --> 0:26:45.119 North Korea is a case in point. We have imposed 0:26:45.200 --> 0:26:49.280 high costs on the country, but it hasn't been sufficient 0:26:49.400 --> 0:26:53.680 to establish the goal. But in many cases I think 0:26:53.760 --> 0:27:00.000 sanctions are effective. You know, the dollar is the world 0:27:00.000 --> 0:27:05.680 world's currency. It's used for all around the world for transactions, 0:27:06.560 --> 0:27:09.639 and for countries to be able to do that and 0:27:09.720 --> 0:27:13.439 transact with the rest of the world, they need to 0:27:13.520 --> 0:27:22.480 operate and through correspondent banks in the United States or elsewhere. 0:27:23.119 --> 0:27:26.160 And the threat to cut off. 0:27:27.520 --> 0:27:34.480 Institutions in other countries from the dollar based international financial 0:27:34.600 --> 0:27:41.280 system is a very serious sanction. We we've used that intensively. 0:27:42.280 --> 0:27:46.400 But you know, in the case of Russia and Ukraine 0:27:46.560 --> 0:27:50.800 that you asked about that this is a situation where 0:27:50.800 --> 0:27:54.919 we felt, you know, we certainly don't want to be 0:27:55.000 --> 0:27:57.680 boots on the ground, and we do want to do 0:27:57.800 --> 0:28:02.160 something that's going to be as effective as we can 0:28:02.200 --> 0:28:07.200