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Solomon Tadesse Testifies On Capitol Hill


Dr. Tadesse on CSPAN

The United States should press China to reform and develop its institutions, including its financial systems, “both to strengthen mutually beneficial economic partnerships and to protect U.S. national economic interests,” Dr. Solomon Tadesse, assistant professor of international business at the Moore School, told Congress recently.

Tadesse’s remarks were made as part of his expert testimony before the congressional U.S.-China commission at Capitol Hill on China’s strategy in global capital markets and the implications for the U.S.

Tadesse’s testimony was broadcast live on C-SPAN.

China’s “dominant strategy for funding economic development, [at present], is the marshalling of financial resources through an actively repressed financial system,” Tadesse told the committee. Such a system “poses serious risks to the security and economic interests of other countries, particularly those of the U.S.” Among the risks, Tadesse emphasized the cost advantages to China that was made possible through financial repression, and the governance risk the Chinese system poses to the U.S. “China’s repressed financial system does not have the institutional infrastructure to provide adequate governance to the companies and businesses it supports” Tadesse said.

While Tadesse discussed the potential risks and threats of China’s financial system to the economic interests of the U.S., he emphasized that China is an ally and a valuable economic partner.

“The benefit of economic engagement with China cannot be overemphasized,” he said. “It is also important to note that it is to China’s interest to reform and develop its financial system,” Tadesse added. “The severe misallocation of capital that breeds in economic inefficiency would pose a serious threat to China’s economy in the long run. Hence, financial reform should be viewed as a win-win strategy for both China and the U.S.”