China Commerce Min: Willing To Discuss Trade Balance With G20

BEIJING (MNI) - China's trade minister said he would be willing to discuss including the trade balance -- and indirectly, the exchange rate

reducing current account imbalances.

At the same time, Commerce Minister Deng Deming said China may post another trade deficit in March, noting that the nation posted a trade shortfall in the first 10 days of the month.

Speaking at a forum at the weekend, Chen noted the G-20 is discussing which some indicators to use to monitor current account balances and so ensure sustainable world economic growth.

China is willing to use trade balances as one such indicator, Chen said.

"We are very willing to discuss these indicators to see if our exchange rate is in-line with market demand and supply and if it is helpful to promote economic balance," Chen said. He added that as Commerce minister, he always considers the impact of changes in the exchange rate on the trade balance.

Chen said China's trade surplus amounted to 3.1% of GDP last year, which ranked ninth among G-20 countries.

"I believe that such a ratio is appropriate for a developing country. And this year we will further boost imports. We may see a trade deficit again in March. And our trade surplus as a percent of GDP will fall further this year," Chen said.

China posted a trade deficit of $7.3 billion in February, the first deficit since March 2010.

"We will continue to increase imports from major trading partners and hope those countries which have big trade deficits with China will relax their export controls to create a better environment for a bilateral trade balance," he said.

Chen noted that 99% of China's trade surplus comes from one single big country -- a clear reference to the United States -- while China posted trade deficits against ASEAN, Japan, Korea, the entire Africa continent and South America.

"We hope that we can sit down with this big country to discuss how to improve the bilateral trade structure. We hope this country can lift its exports controls to China," he said.

"I have said many times that things we want to buy are blocked by Congressional legislation. So we can't imagine that on the one hand, there are many sanction laws against China, and on the other hand, you are asking for a trade balance," he added.

The United States has blocked high-tech exports that can be used for military purposed to China since the Tiananmen Square incident in 1989.

Without naming the country, Chen urged more flexibility from that nation on the issue of making bilateral trade more balanced.

"After this, the discussion on the yuan exchange rate can be carried on under more transparent and fair circumstances," he said.

Chen said China suspended exchange rate reform and pegged the yuan to the U.S. dollar during the global financial crisis but has resumed yuan appreciation since last year.

"Our exchange rate reform goal didn't change. We will push yuan reform forward in a gradual and controllable manner and under our own initiative to establish a market-oriented exchange rate mechanism," he said.

Chen said the foreign trade sector employs over 80 million people, 60% of whom comes from rural areas.

"Stabilizing exports not only matters to our economic growth and employment, but also matters the balanced development between the urban and rural areas," he said.

Source: iMarketNews.com