CCTV/CGTN:

My question is, as President Trump said he hopes that China will reduce its annual trade surplus with the United States by US$100 billion. What's China's attitude on this issue?

Wang Shouwen:

Thank you for your question. First of all, we must understand how the trade surplus was formed. Trade happens between companies and consumers from two countries on a voluntary basis. Sometimes, a country wants to buy, and another country wants to sell. It is not decided by the governments, but by the economic structure and industrial competitiveness of the two countries.

Why does trade between China and the United States appear to be imbalanced? In my opinion, first of all, it is a problem with the structure of the U.S. economy. The U.S. economy is driven by over-consumption and under-saving. Its savings are less than its investments. This determines that it must have a deficit in global trade. The United States has a trade deficit not only with China but also with many other countries. Secondly, in order to maintain the status of the U.S. dollar as an international payment currency, the United States must maintain a relatively large trade deficit.

Third, an important cause of the Sino-U.S. trade imbalance is that although the United States has many advantageous industries, the U.S. government imposes many restrictions on U.S. companies, forbidding them to sell products to China. Therefore, the U.S. exports to China were affected, and the trade deficit emerged. The U.S. high-tech industry is a typical example. And there are many other U.S. industries that are highly competitive, but are not allowed to export to China. When those that can sell goods in China are not permitted to do so, it's natural that U.S. exports to China are low, and that the United States is seeing a trade deficit.

We are delighted to see that after President Trump took office, the restrictions on energy products, crude oil, liquefied natural gas and some other goods were loosened. Previously, these products were totally forbidden to be sold to China. In response, we increased the import of U.S. oil and gas substantially. These are positive measures, and can help solve the problem.

Now, let's look at the specific figures. If we take a closer look at the surplus and deficit figures, we will find the gap is not very large in actuality. Taking into account statistical variations, and the impacts of entrepot trade and service trade, China's trade surplus is only one third of the trade deficit announced by Washington. In the United States, the current account deficit was 4.9 percent of GDP during the financial crisis in 2007. Now, the figure is 2.3 percent. This means the proportion is declining. In China, the current account surplus was 9.9 percent of GDP in 2007, and the figure dropped to less than 2 percent today. Therefore, China and the United States both achieved progress in maintaining trade balance. This is a result that we are all glad to see.

You mentioned that China should reduce the US$100 billion surplus, which is absolutely unacceptable. The first reason is that we are unable to do it. As I analyzed just now, the trade surplus and deficit is determined by market forces as well as the overall economic policies and structure of the U.S., so China cannot reduce the surplus on its own. 

Second, we cannot accept it, because it requires efforts of both sides to reduce the surplus, and no one can reduce the surplus on its own. China wants to buy U.S. products, but the U.S. does not sell and even continues to restrict its exports, then how can the surplus be reduced? Therefore, we hope that the U.S. can relax its export controls of high-tech products to China, increase its domestic saving rate, and actively respond to the measures taken by the Chinese government to expand our import. For example, China will hold the China International Import Expo in Shanghai from November 5 to 10 this year, and we hope that U.S. industries and businesses can take this opportunity to display their products and services to Chinese consumers and importers. We believe that only through the joint efforts of both sides can the trade surplus or deficit be eased gradually. It is not feasible in both theory and practice to set a number and work for it through government intervention. Thank you.

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