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Steffanie Marchese
Timothy Geithner
Photo by: Pete Souza


WHERE: CNBC's "Worldwide Exchange"

Following is the unofficial transcript of a CNBC interview with Treasury Secretary Timothy Geithner today on CNBC's "Worldwide Exchange."

All references must be sourced to CNBC.

ERIN BURNETT: Thank you for joining us today

SECRETARY GEITHNER: Pleasure to be here, Erin

ERIN BURNETT : We've always talked about there being 3 legs to the global economic stool: US , Europe and china. Now you've visited here with all of the leaders, your counterparts here in china. Do you come away feeling better or worse about the Chinese economy and whether it's in a bubble?

SECRETARY GEITHNER: I think China’s economy looks very strong, and what’s very important and you heard the President say yesterday is they’re very committed to this process of reform to balance and strengthen domestic demand. That’s important for China and for the United States and for the world and that means growing opportunity for American companies who export to China, who produce in China.

ERIN BURNETT: One interesting thing today - I was just looking at some of the headlines. This is China Daily. You're on the front page. The headline is Hu Pledges Currency reform - which is a big headline. The (Chinese) President does not usually talk about it. He did, but the first sentence says china pledged to push ahead with currency reforms but only at its own pace - which sort of sounds like nothing's changed. Has anything changed?

SECRETARY GEITHNER: I thought it was promising and encouraging but I’m going leave it to China’s leaders to state their intentions and to describe to the world how they intend to move forward on this.

ERIN BURNETT: Do you feel confident - some experts here in china telling us we could see some moves later this year. Do you think we might or do you think the real question when it comes to China's currency is what happens in Europe?

SECRETARY GEITHNER: Well China’s going to have to balance a number of forces and absolutely they’re going to look at what’s happening in the world – and I’m sure that’ll affect their basic judgment – but I think the important thing is that what you’re seeing around the world does reinforce China’s interest in moving ahead to making sure that their growth in the future comes from more domestic demand, raising incomes, raising consumption here in China. And I think as you heard yesterday they very much believe that reform of the exchange rate mechanism, to allow it to reflect market forces, gradually over time, is an important part of those reforms.

ERIN BURNETT: And of course it has already gone up It has gone up 20 per cent in the past couple of years. Real estate is the other big story here this week. Stocks surged because there was some speculation maybe the government would pull back on recent efforts to try to prick the housing bubble - if you want to use that word - here in China. Did it come up in your conversations?

SECRETARY GEITHNER: We didn’t talk in detail about the real estate markets as you would expect, but I think again what you heard from the Chinese leaders was a commitment to make sure they are working to reinforce this process of recovery here in China and I think they’ve demonstrated a remarkable capacity for guiding this economy through a very challenging environment, enormous record of reform over time, and of course they’re very committed like we are to working together to making sure we’re strengthening this global recovery.

ERIN BURNETT: Amazing what we saw, touring some of these apartments, we will bring our viewers that later this week Another headline is Wuhan Steel gets green light for Africa ventures. Another headline here from the china daily - wu han steel gets green light for Africa ventures. When we were in Africa all we saw were Chinese companies everywhere. China is now the biggest consumer of copper, of coal, of iron, of steel, of aluminum, you name it. There's only so much of that stuff on this planet and we can fight over how much there is - but there's only so much. At some point how does the situation between the u.s. and china not come down to us versus them. Who gets those commodities?

SECRETARY GEITHNER: China is necessarily going to be an important part in larger part in a more important of the global economy going forward, and that’s an inevitable reality of the change of the way of China. And it is going to be good for the world and good for the United States as we’ve seen already. And just to give an example I went on Sunday to visit a middle school in China, a very accomplished school, to a gym where the energy efficient lighting was provided by a small business in Iowa who’s seeing substantial increases in sales to China. They’re out being able to add jobs back – you know it’s not just the major famous American global companies. It’s small companies across mainstream America. And just to give an example, first quarter of this year, US exports to China were up almost fifty per cent, rising at almost double the rate, of our exports to the rest of the world. So this is a very important relationship to the United States, it’s v important for the rest of the world that China continues to reform and expand. And you’re seeing very important increased opportunities for American companies.

ERIN BURNETT: We're hearing China is on board with sanctions against Iran. It's a big issue obviously in the United States. But energy appears to be excluded from these sanctions. The largest oil company here in china says we're going to go ahead with our business in Iran even with these sanctions. Iran is the 3rd largest supplier of oil to China today. How is it possible to see this as any other way of saying these sanctions that China says it's on board with - are meaningless?

SECRETARY GEITHNER: I don’t agree with that, but I’m going to leave it to my colleagues, Secretary of State Clinton and the White House to characterize the very important efforts on the way to strengthen a strong global consensus on ways to confront the risks posed by Iran. I’m going to leave them to characterize that. But China has been very supportive of those efforts, it’s very important to the United States, but beyond that I’m going to leave it to the Secretary of State.

ERIN BURNETT: We were at the Great Wall yesterday - it was pretty amazing thing to see. It's a sense of history and also the scale of things that go on her in china. When you walk in and out of the great wall people are hawking things at you and it's always $1, $1 everything's a dollar. Every book - and some of them are big books that would cost 20 or 30 dollars in the U.S. every t-shirt, every robe. Everything. And it sort of made me wonder how it is possible in a world where in China everything can be made and sold for a dollar that America can make and try to things for more than that. So in a world where things can be made and sold for a dollar how does the U.S. get anything but poorer when it comes to its standard of living?

SECRETARY GEITHNER: Our strengths are very complementary. The United States is uniquely good, and you’re seeing this every week now, every day now. We are uniquely good at making the things that the world needs, including the most rapidly growing markets in the world like here in China. So in anything where technology matters, US firms are enormously productive, enormously creative. It is the great defining strength of the American economy, and it’s partly why we’re coming out of this crisis more quickly. And it’s probably why you’re seeing a recovery led by private investment, by exports, is the great flexibility and dynamism of the American economy that makes us so confident about our underlying fundamentals and again demonstrates why our strengths are so complementary. Now of course there’s things that China does well that we need, too. You see that in the basic balance of trade between our two countries, but our exports of almost everything are technology – from technology to agriculture- are growing very rapidly as a way to demonstrate how important this is to the United States.

ERIN BURNETT: China wants more of America's technology - in particular things some say could be used for military ends. China has the biggest army in the world. Every article I've seen here in China has said we're going to move on currency and the U.S. is going to move on letting some of those high tech military technology come here to china. And they're sort of setting up as if it's a quid pro quo and I'm wondering if that's your perception.

SECRETARY GEITHNER: I don’t think it is at all, but again your point underscores the fact that it’s good for Americans to remember this. Because you know we’ve been going – we’ve been through a very challenging period – but America is exceptionally good at the technologies that are most important to future economic growth both here and in the United States. Now the [US] President as you know initiated a project to take a broad look at how to reform and modernize our existing export control regimes. That was designed for a different era at a different time, and he’s committed to looking at ways to adapt those set of constraints, those set of protections for the challenges we face today.

ERIN BURNETT: What is the most fun thing you did in China?

SECRETARY GEITHNER: Oh that’s a good question (laughing). I think the best thing was to go to that school.

ERIN BURNETT: (laughing)you say that, you look so exhausted.

SECRETARY GEITHNER: You know this. I came here first in 1981, a long time ago, to study Chinese. And it’s incredible to watch what’s happened to this place and to be a part of this endeavor that’s so important to both our countries to strengthen our economic ties, because it’s means increased opportunities for American companies and things we are uniquely good at.

ERIN BURNETT: Well, good luck with the rest of your trip, Secretary Geithner.

SECRETARY GEITHNER: Nice to see you.

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