US must act, too, to cut trade gap
The United
States could continue to run a big trade deficit unless it raises its savings
rate, even if China moves to rebalance its trade, Chinese central bank chief
Zhou Xiaochuan said in remarks published on Tuesday.
"Resolving
Sino-U.S. trade imbalances needs mutual efforts and Chinese are complaining that
the U.S. side has been moving too slowly in cutting its twin deficits and
raising its savings rate," he said in a March 20 speech posted on the central
bank's Web site (www.pbc.gov.cn).
He was referring to the United States' huge budget and current account
deficits.
China ran a bilateral trade surplus with the United States last year of $202
billion, according to the official U.S. tally, and several lawmakers in
Washington are preparing legislation designed to bring two-way trade more into
balance.
The initiatives include a bill by Senators Charles Schumer and Lindsey Graham
that threatens to impose a 27.5 percent tariff on Chinese exports to the United
States if Beijing does not revalue the yuan closer to what they deem to be its
market value.
China's overall trade surplus with the rest of the world
more than triped last year to $102 billion.
"Chinese economists worry that, even when China has achieved basically
balanced trade with the rest of the world, the United States could still run a
high trade deficit with imbalanced China-U.S. trade, but the problem won't be on
the Chinese side," Zhou said.
"The Chinese government has started a package of policies to expand domestic
demand, lower its savings rate, open up markets, float exchange rates and expand
imports to promote balanced international payments," he said.
"We reckon China may need two to three years to achieve a basic balance in
international trade."
China has not allowed the yuan to rise far since revaluing it by 2.1 percent
last July and cutting it loose from a decade-old dollar peg to float within
managed bands. U.S. critics say an undervalued yuan gives Chinese exports an
unfair price advantage.
But Zhou said the key to China's efforts to achieve better-balanced trade lay
not with the yuan but with expanding domestic demand, lowering China's savings
rate and opening its markets further to imports.