Transcript: Under Secretary Larson Interview with Hong Kong TV
(Expresses confidence in U.S. economic prospects)U.S. Under Secretary of State Alan Larson says he believes the U.S. economy remains resilient and will not suffer long-term consequences from the current economic slowdown.
"I'm quite confident that we will be able to bounce back. I think the fundamentals of the U.S. economy are very strong," Larson said in an October 19 interview with Hong Kong Cable TV.
Larson was in Shanghai for meetings of the Asia-Pacific Economic Cooperation (APEC) forum, which will culminate October 20-21 with a gathering of Pacific Rim leaders, including U.S. President George Bush, Russian President Vladimir Putin, and Japanese Prime Minister Junichiro Koizumi.
Larson described the APEC meetings this year as especially important following the September 11 terrorist attacks against the United States.
"People need to know that there is the willingness to take necessary steps to win this battle and I think that's one of the positive signals coming out of the APEC meeting," he said. "A second positive signal coming out of these meetings is that countries are determined to press ahead with the agenda of trade liberalization and of market oriented economic growth."
APEC officials are showing "a very strong determination" to push ahead with the launch of new global trade talks in the World Trade Organization (WTO) in November, Larson said. "There is an understanding that the worst thing that we could do for economies at this stage would be to turn inward. We're not going to let it happen. It is the openness of our societies and our economies that makes us strong and we're going to have to continue along that path."
Asked to comment on the status of U.S.-China relations, Larson indicated that the United States has been gratified by China's support in the wake of the terrorist attacks, and its efforts to help close down potential funding channels for terrorist networks.
"I think we're working on an approach to our relationship that is based on realism and cooperation and working to develop trust," he said of the Bush Administration's policy towards China. "It is our approach and our policy to be very honest and candid in the areas where we don't see things in exactly the same way, and to try to work very hard to develop cooperation in the areas where we have common interests and common views. I think that is the basic philosophy that we are taking into this relationship."
Following is the transcript of Larson's interview with Hong Kong Cable TV:
(begin transcript)
U.S. Department of State
Office of the Spokesman
(APEC Shanghai)
October 19, 2001Interview by
Under Secretary Alan Larson with
Hong Kong Cable TVShanghai, People's Republic of China
October 19, 2001Q: Mr. Larson, the September attack had many effects on the global economy, also on the United States' economy. So how do you see the effects on the American economy and in what field do you think the effect will be the most serious?
LARSON: I think we have seen that the global economy as well as the U.S. economy already was experiencing a slowdown in early September. We've seen in the United States that a very early impact has been on early retail sales. They were down quite a lot in September. I think the important message, though, is the things that we can do together to restore confidence. The meeting here at APEC has been very important in several respects. One, there was a very strong message of solidarity in the fight against terrorism. I think that is a message of confidence. I think also a message of confidence about efforts to restore global growth, including through the launch of a new round of trade negotiations in the World Trade Organization.
Q: So you mentioned the retail recession and how do you see effect on the airlines?
LARSON: Certainly one of the immediate impacts has been on the airline industry. They were directly affected by these attacks and there has been a decline, at least temporarily, air passenger service, and air passenger demand. At the same time, I understand here in the Pacific, because there have been many passenger flights cancelled, there actually are bottlenecks developing in the area of all cargo service. So there's actually a need for more cargo flights to make up for the reduced level of passenger flights.
Q: So do you agree with the analysis that the U.S. already faced an economic recession or that the recession already started?
LARSON: I'm not a very good forecaster so I don't know whether we're in a recession or facing a recession, but certainly we've had a very pronounced slowdown, and it's possible that there will be a period of negative growth. I'm quite confident that we will be able to bounce back. I think the fundamentals of the U.S. economy are very strong.
Q: How would you see the capital outflow for this year, for example, do you see that from your country the American and go to the other place. The distribution of this kind of capital will be more going to China after that?
LARSON: I think if one looks at the big picture the United States is still going to be a place where capital flows into. We have been the largest single destination of foreign direct investment. Many people from around the world invest in our stock markets, invest in real estate in the United States. So I think that we will continue to be a place where people come and put their money at work. To be sure, we also are big investors in the rest of the world and there have been a lot of American companies that have invested in China and I think this also is a trend that will continue.
Q: Talk about China, of course, after the 9/11 attacks, how do you access the US-China relationship after that?
LARSON: First of all I think we have a very multi-faceted relationship in the economic area. Our trade is growing rapidly and our investment is growing rapidly. I think there are a lot of people who earn their livelihood by producing goods that are exported to the United States. There are a lot of American workers that earn their livelihood by goods that are produced for sale in China. So I think it is a very beneficial two-way relationship.
Q: . Do you think after the EP-3 event the relationship has changed a bit or been affected?
LARSON: I think we've worked our way through that. Certainly the response of China to the attacks on September has been very much appreciated by the United States. China was supportive of the effort to get a very strong resolution in the Security Council of the United Nations condemning these attacks, but more importantly, calling for very specific forms of action and cooperation to deal with these attacks, and in particular cooperation in cutting off the flow of funds to terrorists and to those who support and associate with terrorists.
Q: You talk about flow of funds. I remember yesterday I interviewed Mr. Tang and he said China is assessing whether to stop the flow of funds to terrorists. So from your side how far do you think that China already has cooperated with you or still accessing about that?
LARSON: Our sense is that there is cooperation. We've had meetings even this week where senior officials from the Chinese government have described to us the actions that they are taking to make sure that there are not funds in financial institutions in China that belong to people who are supporting or involved in terrorism. I think that this cooperation will deepen. One of the things that countries all around the world are finding is that this is the sort of effort that requires very close cooperation between law enforcement and financial officials within government, but also between law enforcement officials and financial officials of different governments. So there is a network that's being built up of cooperation. It's getting stronger. There's already a great deal that's getting done to freeze assets and to stop this flow of funds and it's going to be very important to intensify those efforts so that we totally squeeze dry any flow of funds to these type of people.
Q: In our impression it seems that around the world, in China the flow of funds of the terrorists or the source of money from terrorists, is not that much to compared to other countries. So can you give to us some concepts about that, so you asked for cooperation for the stopping of funds?
LARSON: I don't have too much comment about whether the amount is large or small. Now, I think the important thing is any time one channel is cut off there will be an effort to find another channel. And that's why we think it's very important that all of the countries participate in this effort. We're very gratified that there is a Security Council resolution that was unanimous and creates an obligation on the part of all members of the United Nations to take these sorts of actions. So we will be working with other countries to help them take actions. In some cases there may be technical assistance that is required, but as of now every nation that belongs to the United Nations has an obligation to take these actions and by having all those countries cooperating then you make sure as one channel of funding is cut off that it isn't replaced by a different channel.
Q: So do you think China in the future, when all the other countries stop the flow of funds, maybe become of the possible for the flow of funds.
LARSON: I'm just making a more general point that this is the sort of effort that you really have to work together on. It's the same thing if one is talking about the financing of terrorism. It's also the same thing when one talks about different types of aviation security measures. I think there's a lot of interest within APEC on cooperating on issues related to critical infrastructure like telecommunications. So we have to help each other out.
Q: We heard from Minister Tang that all the ministers got the four point consensus this morning. I wonder if that is more on the stop of funds. So how would you see that consensus help in your work? How will the four consensus help in your work on anti terrorism?
LARSON: I think it was extremely interesting to see all of the economies that participate in APEC were united in their condemnation of this type of cowardly terrorist attack. We are also united on the necessity to take action against it -- very concerted action. It is seen that this is something that was an assault, not just on the United States, but on all of us. Citizens of more than 80 countries were killed in this attack. Moreover, by its very design it is something that was intended to be an attack on the global economy, an attack on the values of all civilized countries. I found it very gratifying that this was recognized by everyone who participated in this meeting and that this provides a foundation for cooperation on all of the steps that need to be taken to overcome a threat of terrorism.
Q: So all the APEC members already, as you said, are united for the anti-terrorism. So tomorrow we know we will have the summit between China and USA, so how do you think the summit will be more help to anti-terrorism?
LARSON: I'm going to leave that to our two presidents to discuss. I think they're going to be perfectly capable of describing what they are doing in their meeting and what they have been able to accomplish.
Q: Sure one of the topics among them will be the immediate problem to solve, right?
LARSON: I'm sure that will be one of the subjects they discuss, yes.
Q: So in economic how will the summit help with promoting the economic area between the two countries?
LARSON: I think just speaking for a moment about the APEC meeting and how that relates to this issue, I really do think that the two key things right now for confidence in the global economy are one, showing that the world is determined to address and defeat this threat of terrorism. People need to know that there is the willingness to take necessary steps to win this battle and I think that's one of the positive signals coming out of the APEC Meeting. A second positive signal coming out of these meetings is that countries are determined to press ahead with the agenda of trade liberalization and of market oriented economic growth. There is a very strong determination to push ahead with the launch of new negotiations in the WTO. There is an understanding that the worst thing that we could do for economies at this stage would be to turn inward. We're not going to let it happen. It is the openness of our societies and our economies that makes us strong and we're going to have to continue along that path.
Q: So, about the Chinese-US relationship: How do see new administration and government and EP-3 and now the attack and the current the world situation? With that, what do you expect from the summit, what kind of progress in the relationship?
LARSON: I think we're working on an approach to our relationship that is based on realism and cooperation and working to develop trust. We work together and will be working together with China on many issues. On some we find ourselves in very fundamental agreement, on some we see things differently. It is our approach and our policy to be very honest and candid in the areas where we don't see things in exactly the same way and to try to work very hard to develop cooperation in the areas where we have common interests and common views. I think that is the basic philosophy that we are taking into this relationship.
Q: Some of the comments seems that this trip President Bush is to amend the relationship. Would you agree this kind of comment? Actually this kind of comment comes from Hong Kong.
LARSON: I'm a little less interested in addressing those comments and a little more interested in just talking about the things that we have to do together to strengthen confidence in the global economy. Hong Kong is a very significant player in the global economy and has played a very strong role in helping to strengthen the WTO and I think one of the reasons that I've been so pleased by the meetings that we've had is that we've had such a strong expression of support from all of the APEC economies, including Hong Kong, about the importance of moving ahead on the WTO round.
Q: So you don't agree that it's an amendment of relationship between China and the U.S.?
LARSON: I think describing the relationship in very simplified way can be misleading.
Q: Again for the economy, how would you think that the GDP growth for this year, is it quite disappointing?
LARSON: It's certainly going to be lower for the year than it was last year. It was slowing even in the first and second quarter, so it is absolutely clear that 2001 will be a period of an economic slowdown. Again, what I think is important is the United States, we have moved fairly aggressively to respond to the slowing of growth. There's been a very significant easing of monetary policy. Interest rates have been cut several times. The President has pushed forward an economic response to the terrorist attack that has included spending to help rebuild New York City and to respond to those immediately affected, including the airline industry. But also working on a growth package that includes tax cuts and other things that will make our economy stronger over the medium term. So we are moving very quickly to take action to make sure our economy is strong and bounces back as quickly as possible.
Q: Do you think in the short term that the economy can recover?
LARSON: Well, I think it will recover for sure, and again, it's hard for me to give one a forecast of what is likely to happen next week or next month. What I do feel very strongly about is what needs to be done to make sure that the global economy responds and bounces back as quickly as possible. And I think that is the same message of dealing with some of the elements of uncertainty. That is to say, dealing with the terrorist attack, working together as an international community to show that we are determined to defeat this enemy of the global economy. Secondly, pressing ahead with the things that we know we need to do anyway to strengthen the global economy, like further opening markets and liberalizing trade through the WTO. Those are the things that we need to do. If we do those things our economies are going to be fine. I think this whole issue of further liberalization is true in many, many sectors. You mentioned the airline sector earlier on. This is an area where on the surface you'd say, "Well, gee, why do we have to worry about liberalizing airlines? People aren't flying as much." But, as it turns out because of the decline in passenger service due to less demand, there is not enough capacity to move around all the cargo that is the lifeblood of the economy of the APEC region and so we're finding that there's a need to make sure that there is more cargo service that can be launched and that will mean a liberalization of some of the aviation agreements around the region.
Q: So do you think there is a need for further rounds of rate cuts? Because you know there's already many rounds to interest rate cuts, for further rounds maybe.
LARSON: One of our policies in the United States is that we don't comment about the Federal Reserve or what the Federal Reserve should do. We've had excellent experience with having an independent Chairman of the Federal Reserve and a very wise one, at that. So I won't try to predict what will happen. What I can say is that there's been a very pronounced move over the last year to make sure that monetary conditions have eased and so that the availability of money would not be an impediment to the economy. I think that's one of the reasons why we are so confident about the future. One of the even more important reasons is just that we're very confident about the American people. Nothing that happened on September 11 changed the ingenuity of American business leaders, the hard work ethic of American workers. Nothing changed the things that have been the source of economic strength for the United States. So we are very, very confident about the future.
Q: . So the follow on is how would you see that the ... stimulate economy program affects now. You saw what the effect is already?
LARSON: No, I think we will be seeing the effects of the increased spending over a period of time and we'll be seeing the effects of the tax cuts over a period of time. One of the things that's clear about both monetary and budget policies is that sometimes the lags -- the time periods over which they have effect -- are not always easy to predict. It's one of the reasons why I've tried not to be too much of a forecaster, is that it is very hard to predict exactly the time phase. But I think the easing of monetary policy and the increased spending in response to some of the needs that have been created by the September 11 attacks and the tax cuts -- all of these will build momentum in the economy over a period of time and I think that will be one of the things that will contribute to the bounce back.
Q: One follow up question, the last one, is that what is the measure you said China already cooperation in cutting the flow of funds. What kind of measure already done between China and you about cutting the flow of funds.
LARSON: I think the best way to answer the question is like this: In September China worked with the United States and the other members of the Security Council to push through this unanimous Security Council recommendation. Since that was pushed through the United Nations Security Council, there have been contacts between our two governments, and indeed, among a lot of different countries, about how this Security Council resolution should be implemented. We've had contacts between our two Treasuries. I had some contacts during my visit this week. We've been given some information about the steps that the government is taking to freeze assets and make sure that the flow of funds is cut off. We have worked together in the context of the meeting that is going on right here, the APEC meeting, to encourage other countries to take these sorts of steps. We've pledged that we all will ratify all of the United Nations conventions against terrorism, including the convention on the suppression of financing for terrorism. So we've set out together a very vigorous action plan. One of the things I've been talking about this week with my various colleagues in the Chinese government is the steps that we can take together to monitor, not only what each of us is going, but what other countries around the world are doing, because as we've stressed, this is something that everyone needs to participate in for it to be fully effective.
Q: How's Hong Kong included in China? Are you satisfied with what Hong Kong is doing to measure that?
LARSON: Yeah, I think we've gotten good cooperation and we're just going to want to continue and intensify that as we move forward.
Q: Thank you.
(end transcript)
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