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)