US Treasury secretary-nominee Janet Yellen responds at the Senate approval hearing held on video on the 19th (local time). New York = correspondent Cho Jae-gil
US Treasury Secretary Janet Yellen warned that he would not neglect the unfair and illegal practices of the Chinese government. In order to overcome the novel coronavirus infection (Corona 19) situation early, he stressed that he will act big.
Yellen, a former chairman of the U.S. Central Bank (Fed), was assessed for his qualifications for the nomination of finance minister at a hearing on approval of the Senate Financial Services Commission held on video on the 19th (local time). As long as there are no surprises, it is certain that Yellen will be approved at the hearing.
▶ Conflict between the US and China
Yellen made it clear that he would continue to hold President Donald Trump’s tough stance on public relations.
“China is America’s most important strategic competitor,” he said. “It is ready to use every means to counter China’s unfair and illegal activities.” Then, China’s low-wage labor force and poor environmental standards were stipulated.
Earlier, the Trump administration has put pressure on China by imposing sanctions against Hong Kong and Chinese officials, including Hong Kong Executive Secretary Carrie Ram.
Yelan said, “China is weakening US companies by mobilizing illegal subsidies, dumping, intellectual property theft, and trade barriers,” he said.
▶ Economic stimulus
When it comes to fiscal stimulus, Yelan stressed that “the next government will do a great job.” Joe Biden, who begins his presidency on the 20th, has already unveiled an additional $1.9 trillion in support plan. It costs $415 billion to respond to Corona 19, $1 trillion for household aid, and $440 billion for SMEs and local communities.
“Neither the President nor I are proposing such a large-scale relief package without taking into account the national debt burden,” said Yellen. Explained.
The government’s debt ratio will increase due to large-scale stimulus measures, but the current interest rate is so low that it will not be burdensome. “If you help those who have struggled for a long time, the benefits will far exceed the cost,” he pointed out.
“The most important thing is to overcome the epidemic,” said Yellen.
▶ Exchange rate
Yellen said he would not pursue an artificial weakening of the dollar. At the same time, it expressed its intention to respond strongly to foreign exchange rate manipulation.
“The US is not looking for weak dollars to gain a competitive advantage,” he said. “It will also oppose other countries’ attempts to do so.”
“The value of the US dollar and other currencies should be determined by the market,” said Yellen. “I will try to stop any attempts by foreign governments to artificially manipulate the value of currencies to gain an edge in trade.”
It is evaluated that these remarks indicate a return to the stance of the’strong dollar’ policy that has been passed down since the Bill Clinton administration. The strong dollar stance is a policy that the Trump administration has virtually abolished. Treasury Secretary Stephen Manusin once said that “an overly strong dollar hurts the US economy.”
Janet Yellen nominated for US Treasury Secretary Reuters Yonhap News
▶ Symptoms
“If we can coordinate with other countries, we will be able to raise the corporate tax rate even higher,” said Yellen. He said, “Even if you increase the corporate tax rate, you can secure the competitiveness of US companies.”
President-elect Biden pledged to raise the current 21% corporate tax rate to 28% during last year’s presidential election. Prior to President Trump, the US corporate tax rate was 35%.
Yellen mentioned’coordination with other countries’ because he was concerned that the departure of multinational corporations due to tax rate hikes could become a reality. This is because, after the US raises the tax rate, if multinational corporations relocate their headquarters overseas, such as Europe, a much bigger blow to the US economy is inevitable.
However, Yellen opposed the immediate increase in corporate tax rates. He explained, “Only after evaluating that the United States has overcome the corona crisis, any plans such as raising the corporate tax rate will be able to begin.”
▶Labor and investment
“We will take the demands of American workers as a concern,” said Yellen. It is to make it the best value to provide a good job.
“We will focus on support for US workers and SMEs,” he said. “We will implement the support plan as quickly and efficiently as possible.”
However, it also emphasized investment expansion. “We have to invest in infrastructure, invest in workers, and invest in R&D,” said Yellen. “These things will grow our economy rapidly and increase our competitiveness.”
▶Long-term government bonds
Yellen responded, “I am open to this thought” to the question of’will we review the possibility of issuing 50-year bonds in the very long term?’ He said he would weigh the market demand for ultra-long-term bonds.
“There are a number of advantages to issuing long-term bonds when interest rates are very low,” said Yellen.
The US Treasury Department began issuing 20-year Treasury bonds last year for the first time in decades. However, it has been temporarily suspended because the investment demand is not sufficient.
On this day, the New York stock market ended higher thanks to Yellen’s remarks in support of economic stimulus. The Dow index rose 0.38% to 3930.52, the S&P 500 rose 0.81% to 3798.91, and the Nasdaq index rose 1.53% to 13,197.18, respectively.
New York = Correspondent Jae-gil Cho [email protected]