China’s Trade Surplus Not-Due to Global Economic Imbalance.docVIP

China’s Trade Surplus Not-Due to Global Economic Imbalance 　　CHINAS sustained trade surplushas produced concern in many,quarters recently and has trig-gered calls from some countries,notably the U.S.,pressing China to re-valueits currency and to rein in policiessupportive of its domestic industries.However,analysis shows that Chinastrade surplus,which has kept increasingfor about 20 years,is the result of Chinasreform and opening-up drive and of intro-ducing preferential policies to attract in-vestment: It has little to do with the RMBexchange rate. 　　 　　Evolving Towards BasicallyBalanced Trade 　　 　　Chinas trade surplus started gettingnoticeable in the 1ate 1990s and acceler-ated rapidly in the 21st century,reachinga peak before the international financialcrisis began to impact on trade in 2oo8.As Figure z shows,after 2008 the tradesurplus fell somewhat,and the gap nar-rowed further in 2010. 　　Chinas trade surplus in 2010 was US$183.1 billion,a year-on-year drop of 6.61percent,and the second successive annualfall.The narrowing of the margin wasmainly caused by Chinas dynamic do-mestic economy as the effects of Chinasimport expansion strategy have becomemore apparent.With the lifting of pro-eessing trade restrictions,which had beenimposed to curb exports,imporfs of pro-eessing trade-related bulk raw materialsincreased correspondingly. 　　In 2010,Chinas trade surplus ac-counted for 3.1 percent of its GDP.Someexperts have predicted that the proportionwill drop to 1 percent in 2011.We remem-ber vividly that in his letter to the G20summit last year,Timothy Geithner,U.S.Treasury Secretary,called upon membercountries to formulate quantitative tar-gets to.improve the current account im-balance and to bring down the proportionof the current account surplus/deficit toGDP to under 4 percent by 2015.WhetherChina supports this idea or otherwise,judging from the present situation,thedrastic decrease in the percentage shareof Chinas trade surplus in its overall GDPwill b