That the issue of the trade surplus became a focus of both
China's commerce minister and central bank governor at yesterday's
press conference shows the country's resolve to tackle the problem.
But tangible results will not come as a result of China's
unilateral efforts.
The two ministers are quite frank regarding the issue of China's
huge trade surplus, especially with the United States, which is
pressing China hard to revalue its yuan to reduce its trade
advantage.
China is more than aware of its expanding trade surplus and is
seeking to balance international payments by making policy
adjustments, such as the export tax rebate and the steady reform of
its exchange rate regime.
In essence, China is shifting its focus of development from
exports and investment to an accelerated growth of the tertiary
sector of industry the service industries.
Meanwhile, the opening-up of its financial sector will benefit
financial institutions in developed countries, which will boast
better expertise and help bridge the trade gap with China.
As the process continues, in conjunction with the increase in
China's labor and environment costs of production, the trade
balance will become a reality.
But as the ministers said yesterday, the change will not happen
overnight.
During the process, developed economies, which have benefited
more than their third world counterparts from the existing global
trade regime, need to seriously consider how they can play a
constructive role.
Some US legislators have resorted to a coercive stance and
threatened to impose a 27.5 percent increase in tariffs on all
Chinese goods if China is slow in revaluing the yuan. They ignore
the fact that US companies manufacturing in China have greatly
contributed to the Sino-US trade surplus since they produce in
China and export to the US.
They are also blind to the fact that a forced revaluation of the
yuan would do nothing to improve the US disadvantage in
manufacturing but transfer the orders to China's neighbors.
If they are serious in rebalancing Sino-US trade, they should
not push the Chinese government to revalue the yuan, but push the
US government to open up its high-tech export.
(China Daily March 13, 2007)