China Customs announced recently that the trade surplus in May
had reached US$13.004 billion, creating a new record for this year.
Gross amounts were US$46.773 billion for the first five months.
In view of the current situation, it seems unlikely that China
will be able to stick to its early 2006 estimates of "keeping trade
surplus under US$80 billion this year".
Confronted with such huge figures and increasing pressure both
domestic and international to rectify the situation, Prof Zhang
Xiaoji, manager of the Foreign Economy Research Department under
the Development Research Center of the State Council, said that China cannot solve
the issue on its own.
According to Zhang, as the international market booms, so too
China's export volumes.
He said that since the end of 2005, the Chinese government has
been trying to control this export explosion. Some of the measures
implemented include encouraging a moderate appreciation of the
yuan, and restricting the export of resource-consuming
products.
However, he stressed that international trade is not a
unilateral affair. Measures taken by China alone will not change
the situation.
Further, the measures implemented to date have also been to
prevent huge economic fluctuations. It will be a while before the
full effects of macro-adjustment and control are realized.
Zhang suggested that more reliance be placed on the market than
on government intervention if the situation is to right itself.
China's trade surplus is the necessary product of the global
market division. The recent trend has been for multinationals to
pump investments into China, particularly in the field of high
technology. This will continue for some time.
Another result, although not entirely so, is increasing pressure
on China's foreign exchange reserves.
In 2005, forex reserves were US$818.9 billion. They have now
surpassed US$900 billion. The increment here is much higher than
the increase in trade surplus. The influence of short-term capital,
therefore, cannot be ignored.
China's gaping trade surplus has been a key topic of discussion
between China and the US.
But Zhang opined that the US would not impose sanctions on China
because most of the products it imports, such as high-tech
products, are actually made by the multinationals. And US ones at
that.
(China.org.cn by Wang Ke June 30, 2006)
