WASHINGTON (MNI) – The following is the transcript of President
Obama’s remarks about China and global rebalancing made in a news
conference with Russian President Medvedev Thursday afternoon:

Q On China, you’ve already welcomed its decision on the yuan.
Are you satisfied with how far the country has moved since that news?
How will this influence your judgment on whether China is a currency
manipulator? And when will you release your report to Congress on this
matter?

PRESIDENT OBAMA: I think that China made progress by making its
announcement that it’s going to be returning to its phased-in,
market-based approach to the RMB. The initial signs were positive, but
it’s too early to tell whether the appreciation that will track the
market is sufficient to allow for the rebalancing that we think is
appropriate.

I’m going to leave it up to Secretary Tim Geithner to make a
determination as to the pace. He’s the expert when it comes to
examining the currency markets. I will say that we did not expect a
complete 20-percent appreciation overnight, for example, simply because
that would be extremely disruptive to world currency markets and to the
Chinese economy. And ultimately, not surprisingly, China has got to
make these decisions based on its sovereignty and its economic platform.

But we have said consistently that we believe that the RMB is
undervalued, that that provides China with an unfair trade advantage,
and that we expect change. The fact that they have said they are
beginning that process is positive. And so we will continue to monitor
and verify how rapidly these changes are taking place.

And I think that we will be able to track a trajectory. And if
that trajectory indicates that over the course of a year the RMB has
appreciated a certain amount that is more in line in economic
fundamentals, then I — hopefully not only will that be good for the
U.S. economy, that will also be good for the Chinese economy and the
world economy.

More broadly, just to widen out the challenges that the world
economy faces, we said in Pittsburgh in the G20 that it was important
for us to rebalance in part because the U.S. economy for a long period
of time was the engine of world economic growth; we were sucking in
imports from all across the world financed by huge amounts of consumer
debt. Because of the financial crisis, but also because that debt was
fundamentally unsustainable, the United States is not going to be able
to serve in that same capacity to that same extent.

We are obviously still a huge part of the world economy. We are
still going to be open. We are still going to be importing as well as
exporting. But the economic realities are such that for us to see
sustained global economic growth, all countries are going to have to be
moving in some new directions.

That was acknowledged in Pittsburgh. That means that surplus
countries are going to have to think about how are we spurring domestic
demand. That means that emerging countries are going to have to think
are we only oriented towards exports, or are we also starting to produce
manufacturing goods and services for the internal market. It means that
deficit countries have to start getting serious about their midterm and
long-term debt and deficits. And that includes the United States of
America, which is why I’ve got a fiscal commission that’s going to be
reporting to me by the end of the year.

So the point is not every country is going to respond exactly the
same way, but all of us are going to have responsibilities to rebalance
in ways that allow for long-term, sustained economic growth in which all
countries are participating and, hopefully, the citizens of all these
countries are benefiting.

** Market News International Washington Bureau: 202-371-2121 **

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