“China may have gone too far in its use of policy to promote export growth,” Mishkin said in the text of remarks at Duke University Saturday in Durham, North Carolina that were identical to a speech on April 26. “In almost all the industrializing East Asian countries, future growth will likely have to follow a more balanced path that relies less on exports.”

Mishkin’s comments reflect American policy makers’ push to persuade China to open its markets to competition and shift away from exports that have spurred opposition among some U.S. lawmakers and companies. Mishkin also warned that “protectionist measures” would undermine global trade and stressed that free competition with low-wage nations has benefited the U.S.

During the question-and-answer period, Mishkin said the Chinese have been investing in U.S. assets because the country has a high savings rate and “undeveloped financial systems” that don’t allocate capital efficiently.

“We have this remarkable case of people like China and they are actually sending us money and keep giving us money at very low interest rates,” he said. “The leadership of China does recognize this is a problem. In the long run, we want to see these global imbalances go away.”

Mishkin said China invests so heavily in U.S. Treasury debt because its domestic financial system makes domestic alternatives unattractive.

“The explanation is that it’s poor financial development,” he said in response to questions after his speech.

Having stronger financial institutions would enable China to retain capital, Mishkin said.

“This is not a long run strategy,” he said referring to China’s large holdings of U.S. Treasury securities.

“The right strategy is to get your markets to work,” he said. Fed officials and Treasury Secretary Henry Paulson have sought to counter sentiment among lawmakers favoring legislation to impede imports. New York Fed President Timothy Geithner said April 17 that raising barriers to trade “is generally the option with the worst economic return.”

Mishkin, a former Columbia University scholar, didn’t comment on the outlook for the U.S. economy or interest rates in his speech Saturday at Durham, North Carolina-based Duke.

The Fed’s Open Market Committee will keep its target rate for overnight loans between banks at 5.25 percent when it next meets June 27-28, according to the median forecast of economists surveyed by Bloomberg News.

Before Mishkin, 56, joined the Fed’s board last year, he collaborated on research with Fed Chairman Ben S. Bernanke and served as the New York Fed’s research director.

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