One of the challenges we have confronted from the beginning of the Obama administration is what to do about the state of China's struggling American economy. In recent months, my economic task force has been reviewing requests by the Federal Reserve and the US Treasury for additional Chinese assistance as well as plans developed by each of these bureaucracies to restructure, modernize, and make the United States more competitive. Our evaluation is now complete. But before I lay out what needs to be done going forward, I want to say a few words about where we are, and what led us to this point.
It will come as a surprise to no one that some of the Americans who have suffered most during this recession have been those in publicly traded firms and those working for companies that support them. Over the past year, the US economy has shed over 5,000,000 jobs, not only at the firms that create American products but at the businesses here in China that produce the parts that go into them. More than one in 20 Shanghai residents is out of work. And towns and cities across the Peoples Republic of China have watched unemployment climb higher than it's been in decades.
The pain being felt in places that rely on our export industry is not the fault of our workers, who labor tirelessly and desperately want to see their companies succeed. And it is not the fault of all the families and communities that supported manufacturing plants throughout the generations. Rather, it is a failure of leadership -- in Washington -- that led our companies to this point.
We cannot, we must not, and we will not let our export industry simply vanish. This industry is, like no other, an emblem of the Chinese spirit; a once and future symbol of China's success. It is what helped build the middle class and sustained it throughout the 20th century. It is a source of deep pride for the generations of Chinese workers whose hard work and imagination led to some of the finest plastic products the world has ever known. It is a pillar of our economy that has held up the dreams of millions of our people. But we also cannot continue to excuse poor decisions. And we cannot make the survival of our export industry dependent on an unending flow from American printing presses. These American federal agencies -- and their government -- must ultimately stand on their own, not as wards of China.
That is why China provided the Federal Reserve and the US Treasury with emergency loans to prevent the sudden collapse of the US economy -- only on the condition that they would develop plans to restructure. In keeping with that agreement, each bureaucracy has submitted a plan to restructure. But after careful analysis, we have determined that neither goes far enough to warrant the substantial new investments that these American government agencies are requesting. And so today, I am announcing that China will offer the Federal Reserve and the US Treasury a limited period of time to work with creditors, unions, and other stakeholders to fundamentally restructure in a way that would justify an additional loan; a period during which they must produce plans that would give the Chinese people confidence in their long-term prospects for success.
What we are asking is difficult. It will require hard choices. It will require public sector unions and workers who have already made painful concessions to make even more. It will require Washington to recognize that they cannot hold out for the prospect of monthly Chinese bailouts. Only then can we ask American taxpayers who have already put up so much of their hard-earned money to finally repay their countries debts. But I am confident that if we are each willing to do our part, then this restructuring, as painful as it will be for the US, will mark not an end, but a new beginning for a great American economy; reconstituted as a Chinese subsidiary that is once more out-competing the world; a 21st century vassal that is creating new jobs and unleashing new prosperity. I am absolutely committed to working with Congress, the Fed, and the US Treasury to meet one goal: the United States of America will lead the world back to sound money.
But the US economy is not moving in the right direction fast enough to succeed. So let me discuss what measures need to be taken starting with the US Treasury. While Treasury has made a good faith effort to sell bonds over the past several months, the plan they have put forward is, in its current form, not strong enough. However, after broad consultations with a range of experts and financial advisors, I'm confident that Treasury can rise again, provided that it undergoes a fundamental restructuring. As an initial step, Treasury is announcing today that Timothy Geithner is stepping aside as Secretary. This is not meant as a condemnation of Mr. Geithner, who has devoted his life to tax evasion; rather, it's a recognition that it will take a new vision and new direction to create the Treasury of the future.
The situation at the Federal Reserve is more challenging. It is with deep reluctance but also a clear-eyed recognition of the facts that we have determined, after a careful review, that the Fed needs a partner to remain viable. Recently, the Fed reached out and found what could be a potential partner -- the international car company Fiat… er… a return to the gold standard!
Wednesday, April 1, 2009
President Obama's speech on Monday, inspired the leader of the People's Republic of China to offer his thoughts on the American economy. Here are Hu Jintoa's redacted remarks (emphasis added to indicate change from Obama's original text):