Mei Xinyu: The Narrowing Of The Surplus Does Not Necessarily Reduce The Pressure On The RMB Exchange Rate.

China

As a country with the highest dependence on trade in the world,

Looking at the above data, the strong growth of exports, first of all, means that the competitiveness of China's industry and foreign trade is still strong, and the status of the world's factories has not wavered.

At present, China is experiencing a significant increase in costs. Last year's wage surge has made many people at home and abroad exclaim the superiority of China's cheap labor force no longer.

As China is striving to improve the distribution pattern of national income, increase the share of labor income, and strive to improve the pattern of income distribution in a distribution link, the trend of labor costs will obviously continue to rise. Some people at home and abroad have taken a look at China's industrial and export prospects, singing more countries such as India and Vietnam.

But China should not and cannot always rely on the cost of cheap elements to earn a little profit. China's advantages in human resources, industrial support, infrastructure and so on are that India and Vietnam can not catch up in the foreseeable future. The mature industries of China's coastal industry will shift more to the mainland of China instead of overseas ones. China's industrial upgrading will create more and more value-added industries for China. The high growth of China's exports in January this year is a sign.

Secondly, the strong growth of exports also means that the overall economic situation of China's trading partners is improving, which has increased their import demand and affordability.

Although the Spring Festival holiday in February will inevitably urge exporters to work overtime before the festival, if this Spring Festival effect alone does not exist and the growth of demand for trading partners is not enough, it is still not enough to create such a high growth export.

Third, China's trade structure is still continuing to improve, the outstanding performance is that the growth of general trade import and export growth is higher than the overall.

In January, general trade import and export amounted to 159 billion 750 million US dollars, an increase of 49.9%, which was 6 percentage points higher than that of the same period in the same period. The total export volume was 74 billion 890 million US dollars, an increase of 44.1%, which is higher than that of the total export volume (37.7%) by 6.4 percentage points.

There is no doubt that in the background of "global economic imbalance" has been stir fried for several years, China's trade surplus has dropped sharply in January this year, which will cause widespread concern.

As China's trade surplus is decreasing at the same time that exports continue to grow at a high level, it will not bring risks to macroeconomic stability, but will help the external balance of the economy.

The high import growth comes first from the continuous growth of the import volume of primary products and the high prices. However, in order to protect the environment and reserve resources for future war risks, we must limit domestic resources development. In order to meet the rapidly growing demand for resources in China, we must rely more on overseas resources, so that even the large export commodities such as coal were pferred to net imports two years ago.

Last year, the import of coal amounted to 1.6478 billion tons, a sharp increase of 30.9% over the previous year. The reorganization of coal resources in Shanxi and other places will further reduce domestic resources supply and enlarge the demand for imported resources.

Ensuring the supply of external resources is a long way to go for us. This will not last for nearly 9 years, but the bull market of primary products may end and change.

From Southeast Asia, Australia, Canada, Brazil and Angola to Sultan, China has driven the world's multinational economy through vigorous import demand, which means that the miracle economic recovery of last year is essentially "made in China" on behalf of the European economic locomotive.

The sharp drop in the trade surplus in January has also raised concerns among some people. Will China impose restrictions on normal imports? Theoretically, there is no need for China at least.

Therefore, as long as Chinese exporters do have the advantage of technology, quality, price and service, there is no need to worry too much about the dramatic reversal of China's import policy.

China can not rely solely on its own resources to continue industrialisation, and is willing to let trade partners win opportunities to share prosperity through imports. We hope that other countries will repay justice and give more fair treatment to Chinese personnel, commodities and capital.

Financial market participants and exporters are more concerned about the impact of trade balance changes on the RMB exchange rate. After all, the trade surplus has always been the most powerful excuse for external pressure on China to raise the RMB exchange rate.

It was in the background of last year's "currency war" and the US House of representatives at the end of 9 last year that with a high vote on the RMB exchange rate reform to promote a fair trade bill, the statement of "reduction of surplus" before the global financial crisis appeared again. The vice president of the central bank and the director of the State Administration of foreign affairs, Yi Gang, said at a seminar last year at the international monetary fund that China's policy is to narrow the current account surplus. Trade policy, monetary policy and exchange rate policy will aim at this direction. The goal is to reduce the proportion of current account earnings to GDP to below 4%, which has attracted wide attention at home and abroad.

For this reason, the sharp reduction in China's trade surplus is generally understood at home and abroad as the pressure on the appreciation of the RMB exchange rate will be significantly reduced.

However, this view, though well intentioned, is not necessarily realistic.

Because the political pressure to force the appreciation of the RMB exchange rate mainly comes from the European and American countries, the reduction of China's trade surplus is not equal to the reduction of the trade surplus between Europe and the United States.

Even a decrease in trade surplus between Europe and the United States does not mean that the political pressure on the RMB exchange rate will be reduced equally.

This is because the European and American real economy trend will be better than last year, especially in Europe, which is expected to get out of the bottom of the sovereign debt crisis.

If other conditions remain unchanged, improvements in their domestic real sector will mean an increase in import demand.

At the same time, last year, the real economic sectors of Europe and the United States were not in good shape, and the exchange rate of the local currency was weak, which indirectly promoted their exports and suppressed imports. This mechanism was particularly evident in Europe.

This year, as they move out of the sovereign debt crisis and the operation of the real economy sector improves, their exchange rate will go out of the trough, which will have an effect of restraining exports and increasing imports.

Because of these two points, if other conditions remain unchanged, China's trade surplus with Europe and the United States will expand instead of narrowing.

China has cooled the overheated domestic economy, striving to achieve a soft landing, and will also reduce the excessive demand for imported capital equipment.

We do not have any illusions about the trend of trade protectionism in Europe and the United States and the moral hazard of shifting economic adjustment pressure, but we believe that there are many wisely among European and American countries, hoping that they can clearly understand that they may choose to pick up between the worsening trade balance and the economic recovery.

After all, they are the issuers of international currencies, and the worsening trade balance will not explode the kind of financial crisis that has occurred in developing countries.