U.S. Treasury Secretary Scott Bessent announced on the 20th that he is scheduled to have his first phone call with his Chinese counterpart on the 21st (local time).
In an interview with Bloomberg TV on the same day, Secretary Bessent said, "I will have my first call with the Chinese side tomorrow morning. I expect a very productive discussion."
Secretary Bessent did not disclose the name of the person he will be speaking with. His predecessor, former Treasury Secretary Janet Yellen, held a video call last month with Chinese Vice Premier He Lifeng.
Secretary Bessent said his first message will be "We want to work together," and expressed a strong desire to truly stop the inflow of fentanyl precursor substances from China. U.S. President Donald Trump has imposed a 10% tariff on all Chinese imports starting from the 4th of this month, citing the inflow of fentanyl as the reason.
Regarding this call, Secretary Bessent said, "It is just an introductory conversation," but added, "For us to move forward together, China needs to rebalance its economy toward consumption. Currently, China prioritizes the corporate sector while suppressing consumption."
Having specialized in foreign exchange trading during his hedge fund investor days, Secretary Bessent described China's foreign exchange policy by saying, "The yuan is a currency whose value is very difficult to assess." He expressed doubts about whether foreign investors who have invested in China will be able to withdraw their funds in a few years, stating, "It is very difficult to accurately determine the value of the yuan."
He also said, "The U.S. still maintains a strong dollar policy," but added, "That does not mean other countries can weaken or manipulate their currencies against the dollar."
When asked whether President Trump would impose additional tariffs, he replied, "I will not give up on his negotiating power."
He said that increasing the proportion of long-term bonds in government bond issuance is somewhat unlikely at present, considering the current high inflation. He stated, "It is still far off. We need to see what the market wants," and added, "It will depend on the path."
Secretary Bessent repeatedly criticized former Secretary Yellen for increasing the proportion of short-term bonds before his appointment. However, since taking office, he has maintained Yellen’s bond issuance policy. Regarding this, he said, "The previous administration shortened some government bond maturities, but we will no longer reduce them." He also added, "We are still seeing a kind of Biden inflation," and "While increasing long-term debt sales is the ultimate goal, we will not send signals at this time."
Secretary Bessent dismissed recent market speculation that the U.S. might revalue its gold reserves to reduce borrowing demand or to finance the establishment of a sovereign wealth fund. He said, "I have no plans to visit Fort Knox (the U.S. Treasury gold reserve), but all the gold remains intact."
Meanwhile, Secretary Bessent does not plan to attend the upcoming G20 Finance Ministers meeting next week in South Africa. He said he heard from the Chinese side that Premier He will also not attend. He added that he will meet global officials at the International Monetary Fund (IMF) and World Bank Spring Meetings scheduled for April.
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