The U.S. economy is well-positioned to weather the headwinds this will produce, according to Wally Adeyemo, deputy secretary of the Treasury for the United States, who said on Thursday that China’s economic downturn may cause problems for some developing nations and areas that depend on it for growth.
Adeyemo revealed to Reuters that the Treasury is closely watching economic events in China, where growth is stalling due to a deteriorating real estate slump, subpar consumer spending, and declining credit growth. Adeyemo was speaking during a visit to the Chickahominy Tribe in southeast Virginia.
“You’re seeing the Chinese economy demonstrate weakness that has global implications. Because of the decisions we’ve made, we’re probably best prepared to deal with the headwinds that this has created,” Adeyemo said, referring to the United States.
“I am worried about other countries that are reliant on the Chinese economy — in the developing world, in Asia, but also the European economy,” he added.
He said China’s situation is partly the result of policy choices made by Beijing to deal with COVID-19. While China adopted a zero-COVID policy and strict lockdowns that only lifted this year, the U.S. sought to ensure its citizens had access to effective mRNA vaccines and ample federal resources to get them through the pandemic.
Adeyemo said U.S. economic momentum was being extended by continued investments being made through the 2021 American Rescue Plan (ARP) — including funding for tribal governments and other underserved communities — as well as legislation to promote infrastructure, semiconductor production and the clean energy incentives in the Inflation Reduction Act (IRA).
“The thing that we are most encouraged about is that our economy is doing well, and the reason it’s doing well, I think, is because of the investments we’ve made through the ARP, through the IRA, through the bipartisan infrastructure law” and providing resources to communities and areas that have been overlooked in the past.
These investments will help the U.S. economy overcome the headwinds created by slower growth and demand in China, the world’s second-largest economy, he said.
“We’re going to continue to monitor what’s happening there, but our goal really is to make sure that we take the steps here to make sure the American economy can grow despite the headwinds,” Adeyemo said.