In his first public appearance in New York since July, U.S. Treasury Secretary Henry Paulson, arguably the nation’s most powerful person right now, talked about efforts to stem foreclosures and advocated closer ties with China as a means to strengthen the U.S. economy.
"While some see China as a threat that must be countered or contained," he said in a 10-minute speech, "I believe that the only path to success with China is through engagement. We must recognize that China’s growth is an opportunity for U.S. companies and consumers, for our producers, exporters and investors."
Secretary Paulson addressed the National Committee on United States-China Relations at the Plaza Hotel on Tuesday, where he was honored at the non-profit organization’s annual gala dinner for his work promoting dialogue between the two countries. (The press was kept safely contained in balconies above the crowd during the secretary’s speech.)
His remarks focused on strengthening the relationship between Washington and Beijing through the Strategic Economic Dialogue, an initiative he launched with President Bush and Chinese President Hu Jintao in 2006 to ensure that the often adversarial superpowers would benefit equally from economic opportunities.
"Some in China look at the recent failures in our financial markets and conclude that they should slow down their reforms," he said. "But there is a great opportunity for China to learn from our significant mistakes and move forward with reforms that have the potential to produce important gains for China and its people."
Addressing those mistakes only briefly, Secretary Paulson said that the Administration would "do what is necessary" to bolster U.S. financial institutions and minimize the effects of market volatility through a "multitude of powerful actions."
Although Secretary Paulson focused primarily on China, he also asserted that greater collaboration between international governments would prevent misconduct in the markets, alleviate the effects of the credit crunch, and protect the investments of the general public.
"We must also take care to ensure that our actions are closely coordinated and communicated," he said, "so that the action of one country does not come at the expense of others or the stability of the system as a whole."
When asked by an audience member when the Treasury would address the problem of mass foreclosures, Secretary Paulson alluded to progress it had already made since August 2007, noting that 200,000 foreclosures had been avoided every month because of its efforts. He added that purchasing mortgages, illiquid assets, home loans and mortgage-backed securities would establish more leverage and allow for more "things good to do."
Secretary Paulson conceded that the financial crisis had – and would continue to – disrupt the economy, but remained encouraging about the future.
"Americans are a strong and optimistic people," he said in his speech. "Although we expect current challenges to continue for a number of months, we will overcome them as we have overcome every challenge our nation has ever faced."