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How to evaluate volatility of China's trade surplus? |
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08:40, August 06, 2007 |
Latest Customs statistics show that China's trade surplus hit $26.91 billion in June and created the highest monthly record of the year. It is learned that the accumulated trade surplus of the first six months reached $112.5 billion, more than a half of the trade surplus of the whole last year, $177.5 billion. Some experts believe that there is volatility in the number of China's trade surplus. But in the absence of relevant measures, the country's trade surplus will continue to increase substantially. On this issue, reporter of People's Daily recently had an interview with Ms Wang Hongxia, deputy director and deputy research fellow with the International Trade and Economic Cooperation Research Institute of Ministry of Commerce.
Volatility not fundamental reason for trade surplus
Q: What do you think of the volatility of the current trade surplus? How strong is it? What''s the relationship between the volatility and the continued growth of the trade surplus?
Wang Hongxia: As everyone knows, China's competitiveness mainly lies in its price advantages. For example, as US' largest source of trade deficit, China raised both its imports cost and exports prices recently. But the general prices of its products are still lower than the US products which mainly contributed to the deficits. The top three electromechanical products with US deficit are: computer products, wireless equipment and other office machines. The total trade deficit reached $59.27 billion, accounting for 25.5% of the total US trade deficit with China. The three products include a total of 63 sub-types of products, of which, 42 types bring China surplus with the United States. But of the 42 types of commodities, the unit price of only floppy disk drives, inkjet printers and handheld (including car) wireless telephones are higher than that of the US''. All the remaining 39 types bear lower prices than the US.
In addition, according to statistics, the unit price of 31 types US commodities are more than three times of those of China. 14 types are even over 10 times more expensive than China-made products. For example, the unit price of US-made router is 431 times as much as of China-made products. US-made storage components are 230 times as expensive as China-made products. Obviously, it is the unique competitive advantages of the Chinese products that have brought it strong demand from the international market as well as the high surplus.
Therefore, the long-term substantial growth of trade surplus actually is an inevitable reflection of China's economic development during a specific time. It is decided by the labor division of the country in the globalization environment and its unique product competitive model. Undeniably, subject to the impact of various short-term factors and policy expectation, the trade surplus will have a certain degree of volatility. But the so-called volatility will not become the underlying cause of the long-term existence and sustained growth of the trade surplus.
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