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China cannot reduce trade surplus on its own
www.chinanews.cn 2006-06-29 15:10:20
Chinanews, Beijing, June 29 - China cannot solve the issue of its massive
trade surplus on its own, said Prof Zhang Xiaoji, Director General of the
Foreign Economic Relations Department under the Development Research
Centre of the State Council.
China's trade surplus hit 13 billion US dollars this May, setting a
monthly record for this year. Trade surplus has accumulated to 46.773
billion US dollars in the first five months of 2006.
Zhang indicated that when the Customs General Administration of China
released these figures on June 12, overseas concern about China's huge
overall trade surplus this year heightened. The early 2006 forecast of
"controlling the trade surplus to under 80 billion USD this year" seems
to be beyond reach in view of the current situation.
Zhang said that the trade surplus issue is mainly due to many
international factors. China has gotten to its position of having a trade
surplus through its advantage in its industrial structure in the last
decade, and this advantage may continue for another ten years.
Zhang noted that since the end of last year, the Chinese government has
adopted many measures in an attempt to control the trade surplus. The
government has done a lot of what it could do by restricting the export
of resource-related products through a slight RMB appreciation. However
one cannot entirely count on the Chinese government's macro-control to
solve the entire trade surplus issue.
In the final analysis, China's trade surplus is determined by the
division of labor in today's globalized world. The trend of
multinationals transferring their production to China and changing most
of the world's imports and exports into intra-company transfers is
irreversible. At the same time, we can see that foreign investments in
new and high-tech industries keep growing, indicating this round of
industry transfer has not ended and a new global economic structure will
continue to evolve. Hence he believes that the resolution of this issue
cannot merely depend on the Chinese government's macro-control policies.
If it is indeed necessary for the RMB to appreciate, China can raise the
magnitude of the RMB's fluctuation. As the exchange rate is essentially
one lever of market control, it will do no harm for RMB to revaluate,
said Zhang.
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