GOOD SPEECH BY PAULSEN IN SHANGHAI
. Prepared Remarks by Treasury Secretary Henry M. Paulson, Jr. on the Growth and Future of China's Financial Markets

Message from Treasury Secretary Hank Paulsen to the Chinese: you can become a part of the dynamic center of the world economy, instead of acting like a mere exporting periphery. To succeed, however, you need to modernize the financial system ― and strenghten property rights:

The global economy, which over the last several years has been as strong as any I have seen during my business lifetime – has been characterized by strong growth, low inflation, and high levels of liquidity... Deep, liquid, and efficient capital markets pave the way for prosperity, opportunity, and economic dynamism, while minimizing and diversifying risks ... Open, competitive, world-class financial markets are the backbone of stable and balanced growth. Markets connect money with ideas and ambition – which are the lifeblood of innovation and dynamism. They offer a diverse array of financing channels, providing for more innovation and a lower cost of finance.

Strong capital markets require strong property rights; a robust supervisory regime with clear, transparent rules which strike the appropriate balance to ensure market integrity while promoting the entrepreneurial spirit and innovation; sound accounting standards; strong corporate governance; strong financial institutions; objective, independent financial information, analysis, and research; a meaningful disclosure regime; and independent credit rating agencies ... One lesson I have learned over the years is that although perhaps not as easy politically, it is better to implement reforms during periods of economic strength.