Adviser: China trade surplus may be zero in 2 year

By Wu Nanlan and Daniel Xu
0 Comment(s)Print E-mail China.org.cn, November 18, 2011
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China’s trade surplus may disappear within two years as domestic demand rises, an adviser to the country's central bank said Friday.

"In one to two years, our trade surplus will be zero or even negative," Li Daokui, an adviser on the Monetary Policy Committee of the People's Bank of China, said at the China Summit 2011 in Beijing, part of the Economist Conferences in Asia.

 Li Daokui at the China Summit 2011 in Beijing

Li Daokui at the China Summit 2011 in Beijing 

Li said he expects the country's full-year trade surplus to settle at US$150 billion, accounting for 1.6 percent of the country's gross domestic product this year. This is compared to a trade surplus of just below US$300 billion in 2008, account for 8 percent GDP. Li said this margin will continue to narrow according to his projection model.

The world's second largest economy has already seen its trade surplus decrease this year, falling 36.5 percent year-on-year to US$17.03 billion in October, far below the prior projection of US$25.8 billion. It shrank by 10.6 percent to US$107.1 billion in the first nine months. According to data from the Ministry of Commerce, the annual total could shrink by around US$30 billion from 2010 if the downward trend continues.

"It's possible for the renminbi to face depreciation pressure. If that time comes, let the market decide its fluctuation," Li said, referring to the Chinese currency, the yuan.

The yuan strengthened 5 basis points to 6.3548 against the U.S. dollar on Friday. China's currency has appreciated 2.3 percent against the dollar in the past six months according to the China Foreign Exchange Trading System.

Li said because of the balancing of trade surplus, the mounting international pressure on China's currency value reflects more on its trade partners. During his speech, he called on domestic policymakers to take a more proactive approach toward many international issues including the European sovereign debt crisis "as a way to participate in efforts of reshaping tomorrow's world economy."

"Only through proactive participation in the reconstruction of a world order can we reduce pressure on such issues as exchange rate," Li said. "Do not focus only on small issues like the exchange rate."

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