China scored a foreign trade surplus of 39.61 billion US dollars in January and February of 2007, a rise of 226 percent year-on-year, and its trade surplus had reached 177.47 billion dollars in the whole of 2006, with foreign trade totaling 1.76 trillion dollars. Against this backdrop, it is quite natural for the country's huge trade surplus to draw extensive global attention. So Minister of Commerce Bo Xilai has cited ��surplus reduction�� as a matter of prime importance for this year in the nation's external economic and trade work.

In fact, the long-term alleviation of trade imbalance does not necessarily amount to the apparent easing of imbalance on a short run. In 2006, the expansion of double surpluses in the international payment were ascribed to the joint role of numerous factors, such as the bulk of processing trade in external trade, the effect of increasing reverse J curve from the Renminbi (RMB) revaluation, a sustained shift of global production to China and the disguised capital inflow under the pressure of an anticipated revaluation of RMB.

Furthermore, the reform on the export refund regime to lower or rescind a tax rebate of some commodities, though facilitating to reduce a trade surplus on a medium- or long-term basis, has, as a matter of fact, inspired enterprises to add up their surpluses before the new regulations concerning export tax refund come into effect. And this was precisely the reason for a record of over 20 billion for China's trade surplus for two months in a row to shape in October and November of 2006.

Looking ahead, global economy remains in a state of relatively fast-development, with its growth rate exceeding 5.2 percent in 2006 and likely to retain more than 4.5 percent this year. As some developed nations have a relatively high demand on low-grade and cheap commodities, China would hopefully increase its export of such commodities. So it will possibly retain the basic pattern of double surpluses with its international payment over the years ahead.

In the course of adjusting its international payment, China, faced with rifts or conflicts between pluralistic or multi-objectives, has to do an all-round balancing. Control of trade surplus and foreign exchange (forex) growth (or balancing of outbound economy) and the stabilization of goals are in uniformity among those main objectives of economic growth, job creation, price stabilization and the balance of the export-oriented economy and the upgrading of domestic production mix. The effort to control trade surplus and increase forex reserve, however, contradicts to some extent with the economic growth, job creation and the lifting of production mix. Although it needs to replace the demand from overseas with domestic demand for a medium or long-term period as the main driving force for economic development, China still finds itself hard to accomplish the goal in a short period of time, as the drastic beefing up of investment will further aggravate the already grave overproduction capacity, whereas increased consumption is decided by bettered distribution pattern and rehabilitated or improved social security system, which cannot be attained overnight. Therefore, if China steps up its intensity excessively to curb trade surplus and forex reserve growth, the country will face the risk of stalling its economic growth, which may be hard for it to sustain.

Out of its purpose to avoid or avert the stalling of its economic growth and spur its production mix, China cannot be expected to chalk up a drastic shift in an absolute scale from the increase to decrease in its trade surplus and accumulated international assets in the next year or coming two years. Instead, it can only hoped to somewhat contain or curb the excessive growth speed.

Moreover, ��It takes two to tango,�� as a popular saying goes. Both a trade surplus of China or that of the U.S. are the outcome derived from issues relating to the macro economic structures of both nations. Consequently, adjustment from the Chinese side alone cannot produce much effect, and the U.S., the EU and other trading partners, too, should also take up their obligations accordingly. To China's delight and gratification, some people of insight in U.S. and Europe have become aware and openly acknowledged this truth. US Reserve Board Chairman Ben S. Bernnanke said his speech at the Chinese Academy of Social Sciences in Beijing on Dec. 15, 2006: ��Regarding global imbalance, I have discussed means by which China can reduce its contribution to the imbalance while encouraging domestic consumption. The United States must also do its part, in particular by increasing its own rate of national saving and by avoiding protectionism.�� These earnest remarks of Bernnake's indeed pose a kind of real progress that deserves commendation.

By People's Daily Online and its author Mei Xinyu, a noted researcher with the Academy of the Ministry of Commerce