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"Wall Street Journal" article: The Chinese trade data by March to defend the exchange rate policy

"Wall Street Journal" article: The Chinese trade data by March to defend the exchange rate policy


Six released data, China March trade appear first monthly deficit in six years, the Chinese Ministry of Commerce to respond quickly to refute the grounds of the temporary value of the RMB revaluation is necessary.

According to data released by China Customs showed that imports of bulk commodities since last month's sharp rise, China March trade deficit 7.24 billion U.S. dollars, in February for the surplus of 7.61 billion U.S. dollars. March imports rose 66% over the same period, of which imports of crude oil and copper close to record levels. At the same time, the international market impact of soaring commodity prices, in March to further promote imports.

Chinese government officials a few weeks ago, said in March foreign trade deficit that may arise so as to emphasize the strong economic growth in China is to lift purchasing power of goods to other countries. In fact, because of the economic stimulus plan to increase China sourcing in the overseas market, China's trade surplus has been declining in the first quarter, the cumulative trade surplus down 77% from a year earlier to 14.49 billion U.S. dollars.

Customs data show that in March trade deficit occurred mainly in mainland China and Taiwan, Japan and South Korea, China, the United States and the European Union's trade surplus is still manifested. It is these large trading partners accuse China of the yuan and the dollar linked to the actual practice of the Chinese exporters an unfair trade advantage, and led to China's huge surplus in international trade.

Solidarity has been the export enterprises, and exchange rate adjustment against the Chinese Ministry of Commerce trade data to the ground in March rejected the need for revaluation.

Ministry of Commerce spokesman Yao Jian said in the announcement, China's trade balance continued to improve the RMB exchange rate basically stable for the creation of the conditions. Yao Jian said that in the RMB exchange rate basically stable situation, China's trade surplus continued to decline in March showed a deficit of this situation, under the conditions of economic globalization, affect the trade balance is not the decisive factor in the exchange rate, but the market supply and demand and other factors.

Nevertheless, in March foreign trade data can not quell international criticism of China's foreign trade policy, politicians and economists that China's trade deficit difficult to maintain, and soon will become surplus

Economists said that as a result of domestic enterprises in February Lunar New Year holiday week, but have not started in time, exports in March due to lower levels. While in March, 24.3% lower than the export growth of 31.4% in the first two months of this year, but still maintain a rapid growth.

As the March trade data shows that China is not a fundamental change in the trend of economic growth, analysts widely expect China will in July 2008 the yuan pegged to the dollar since the implementation of the policy adjustment. Economists said the increase flexibility of RMB exchange rate and the renminbi's rise would help China cope with rising domestic inflationary pressures and help to reduce reliance on the U.S. economic performance.

RBC Capital Markets analyst Brian
Jackson said they believe the Chinese government will adjust the RMB exchange rate is not to quell international pressure, but because the domestic situation, the decision was made in China's own interests.

China does not want to adjust the exchange rate are mostly political reasons, the United States in the exchange rate on recent attempts to leave space to China, to prevent the outside world that China was forced to yield to international pressure to agree to. The U.S. Treasury Department recently announced the postponement of the exchange rate published reports, the U.S. government will in this report indicates that China is manipulating the exchange rate position. In addition, U.S. Treasury secretary last week on a whirlwind visit to China.

At the same time, Chinese officials did not appear on the March trade deficit to show any alert, Secretary General Administration of Customs General Statistics Cheng Sheng Saturday in a television interview that such a deficit is benign, because it is both the import and export show rapid growth over the place, he said, despite the trade surplus will be reduced, but long-term trends in China's foreign trade surplus will remain in the main.