Paulson to China: ‘Time is of the Essence’

By March 8, 2007General

In a lengthy and wide-ranging speech in Shanghai yesterday, Treasury Secretary Paulson nudged the Chinese to move more rapidly toward more transparency and liberalization of its financial and capital markets. Said Paulson:

“Time is of the essence. China’s underdeveloped financial markets place the nation in a challenging position, trying to balance between a centrally administered and a market-driven economy. One lesson I have learned over the years is that although perhaps not as easy politically, it is better to implement reforms during periods of economic strength. The risks for China are greater in moving too slowly than in moving too quickly toward transparent, liquid, stable capital markets. The longer China waits, the more difficult it will be to create robust capital markets and reach your goal of more balanced, harmonious, and innovation-based growth. Some industries that may seek protection from competition will grow more politically powerful as they grow more economically powerful. That will make it more difficult to withdraw protection, to the detriment of a nation and its citizens who are deprived of world-class performance.”

Here’s a link to a good Bloomberg story on the speech and here’s a link to Paulson’s full remarks.

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  • Interesting point about it being easier to institute reform when things are good, rather than waiting until they go bad. Unfortunately, in many respects (mostly political), it is also easier not to institute reforms when things are good.