Ministry: Tweaking RMB no cure for Sino-US trade imbalance

15:08, March 25, 2010      

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RMB appreciation is not a good way to solve the Sino-U.S. trade imbalance, said Zhong Shan, China's deputy minister of Commerce (MOFCOM) in Washington on March 24, 2010(EST). He warned that if one country wanted to expand its exports while suppressing another country's exports, it would only backfire, harming mutual interests.

At a breakfast meeting Zhong said China and America should strive to seek and expand common interests and insist on using communication and consultation to properly handle economic and trade frictions. China's trade surplus with the United States is the result of the international division of labor and industrial transfer under the context of economic globalization. Raising the RMB exchange rate could not solve the issue in fact, he stressed.

During the period of 2005 and 2008, the RMB against the U.S. dollar appreciated by 21 percent, but China's trade surplus with the United States did not fall. Rather it saw an annual growth of around 21 percent. Since 2009, the RMB exchange rate has been basically stable. During that time China's overall trade surplus fell by over 34 percent while the surplus with the United States fell roughly 16 percent, Zhong said.

He pointed out that China believes the basic stability should be maintained not only for the RMB exchange rate but for monetary policies of the U.S. dollar as well. "U.S. dollar devaluation is bound to have a significant impact on the world's financial system and economy. Either yuan’s big appreciation or USD’s large depreciation does not conform to the interests of all nations in the world, including China and America," Zhong noted.
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