Economic Policy News
- To strive for trade balance: Wu Yi
Date: 18-Jan-2007 Sources: (Xinhua Online)
CHINA will strive to reduce its trade imbalance and to boost domestic demand this year, the Xinhua news agency reported Tuesday, citing Vice Premier Wu Yi.
Wu's remarks at a work meeting on commerce reiterated China's official stance that it will seek to reduce its external imbalances, with Commerce Minister Bo Xilai making similar comments earlier this week.
China's burgeoning trade surplus, which rose 74 percent to US$177.47 billion in 2006, has been cited by critics of China's foreign exchange policy as evidence that the government keeps its currency, the yuan, undervalued.
People's Bank of China governor Zhou Xiaochuan said at a meeting in Basel, Switzerland, last week that if the trade surplus continues to grow, China can further increase the flexibility of its exchange rate.
The government is also concerned that the trade surplus feeds the growth of China's foreign-exchange reserves - the world's largest at US$1.0663 trillion at the end of 2006 - boosting liquidity and contributing to rapid credit and investment growth. Such investment growth could lead to excess capacity and eventually to job losses.
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