No matter whether China revalues it currency or not, the United
States trade deficit will remain unaffected, said Chinese financial
experts.
The US Senate passed a bill Wednesday, saying it would slap a
27.5 percent tariff on Chinese imports if China does not revalue
its currency within 180 days.
"This is an old trick of the United States to make currency
politicized," said Li Yang, head of Institute of Finance of Chinese
Academy of Social Sciences.
In 1980's the United States also criticized Japan on currency
matters.
Li said, "What the United States has done is to claim that
because China has gained great profits from controlling its
exchange rate, it should be responsible for trade deficit of the
United States."
"However, whether China revalues its currency or not will not be
helpful for the United States to solve its financial and trade
deficit problems. This is because the deficit is rooted in the
structure of the United States, that is, the imbalance between
savings and investment."
Thursday, Qin Gang, spokesman of the Foreign Ministry, in
response to the new bill, said, "If one country's fiscal deficit
could not be made up by its own private savings, it has to go to
foreign exchange inflows, which usually causes deficit problem in
current account."
"The United States should look more into domestic means to
restore its economic balance."
Yi Xianrong, a colleague of Li, said the pay that Chinese
workers get are much less than what the US workers get. So even if
the RMB is revalued by 50 percent or 100 percent, it cannot change
the fact that the cost of Chinese labor is much lower.
Yi said China's surplus in Sino-US trade does not indicate that
all benefits go to China. The US people can buy inexpensive and
good products from China and the profits for Chinese exporters are
lesser than for US importers. At the same time, China has bought
large amount of treasury bonds from the United States.
"So we can say that the United States has shared the fruits of
China's economic development," Yi said.
A report from the International Monetary Fund said that the RMB,
China's currency, has not been undervalued. The US Treasury
Department released a report last December, saying that the Chinese
government does not trade unfairly with the United States by
controlling the RMB exchange rate.
Yi said the RMB exchange rate cannot be adjusted rashly since we
cannot find an appropriate point to relate it to the US dollar.
What's more, in current circumstances, adjusting may bring
risks.
Guo Shuqing, former director of the State Administration of
Foreign Exchange, said the yuan fluctuates simultaneously with the
US dollar. Within the same range it is basically stable against the
dollar.
"Following the Asian financial crisis in 1997, currencies in
most of China's neighboring countries depreciated, but a strong
dollar has pushed higher the renminbi exchange rate on average from
1997 to 2002. Only after 2002 did the dollar start to weaken --
together with the yuan," Guo said.
Li Yang said China has made "remarkable efforts" to improve the
Chinese exchange rate system and that a judgment on whether the
currency has been undervalued should be made from the perspective
of the country's position in the world economy.
On March 14, Chinese Premier Wen
Jiabao said China is working on a plan for a more flexible
exchange rate for its currency, but the specific measures might
come around unexpectedly.
(Xinhua News Agency April 10, 2005)