Larry Summers exposes China problem that has to be fixed 'very aggressively'
Larry Summers just issued a warning about a significant problem that is developing on the world stage, namely, that, whereas the United States has gone passive, China has gone very active.
Summers issued the warning on Friday during an appearance on Bloomberg Television's Wall Street Week.
For those unfamiliar with Summers, he is an economist and a Harvard Professor.
He also was the Secretary of the Treasury during President Bill Clinton's administration and the director of the National Economic Council under President Barack Obama's administration.
The China problem that needs to be fixed 'very aggressively'
During his appearance, Summers, in part, touched upon Treasury Secretary Janet Yellen’s recent speech on China.
It is in this context that Summers said, "we just aren’t providing resources to the world on the scale that the Chinese are."
I remarked last week on your show about people in the developing world who felt they got lectures from us and airports from the Chinese, and even though they agreed with the lectures from us, the airports really weren’t the same as the lectures. They were vastly more valuable, and we’ve got to be fixing that very aggressively.
Summers went on to bemoan the fact that he does not "see that in the approach that we’re taking to the international financial institutions in terms of promoting their expansion" - that he does not see that "in terms of ways in which we’re trying to rally countries towards economic integration."
In Summers's view, this is a clear problem.
Despite what Summers had to say here, he agreed with Yellen's recent speech, calling the tone she took in it "appropriate."
In the speech, Yellen said:
[I]n recent years, I’ve also seen China’s decision to pivot away from market reforms toward a more state-driven approach that has undercut its neighbors and countries across the world. This has come as China is striking a more confrontational posture toward the United States and our allies and partners – not only in the Indo-Pacific but also in Europe and other regions.
To address global problems, Yellen went on to argue that China and the United States need to reestablish "constructive engagement between the world’s two largest economies."
At the same time, Yellen, during the speech, made several attempts to appease those who would be against such an approach.
Yellen, for example, said, "even as our targeted actions may have economic impacts, they are motivated solely by our concerns about our security and values."