China never sought a trade surplus, and an excessive surplus will not benefit China's economic development in the long run, said Liu Haiquan, an official with China's Ministry of Commerce, in a recent interview with People's Daily.
Developed countries, including the United States, blame China for its trade surplus and its responsibility for the imbalances in global trade.
Liu noted that China's huge exports are mutually beneficial for both China and its overseas markets, and it is unreasonable to blame China for the massive surplus without mentioning the benefits brought to people all over the world.
China's trade surplus is not excessive
Statistics show that China has been recording a lasting trade surplus since 1994, and its portion of the country's gross domestic product (GDP) was below 3 percent for several years.
China's trade surplus experienced rapid growth only after 2005. The country's trade surplus hit 298 billion U.S. dollars in 2008, accounting for 6.9 percent of that year's GDP.
Compared to the world's major exporters, China's trade surplus is relatively low. Germany has witnessed a surplus for 58 consecutive years since 1952, with its portion of GDP standing as high as 8 percent. Japan recorded a continuous trade surplus since 1981 and the United States also experienced a lasting trade surplus after World War II.
China's trade surplus started to decline since the outbreak of the global financial crisis. Its trade surplus dropped 34 percent, or 102 billion U.S. dollars year on year, and continued to drop 42.5 percent in the first half of this year.
Currently, the trade surplus only accounts for 2.2 percent of its GDP, which is within an internationally-recognized reasonable range.
Multinationals are major contributors to China's surplus
"In fact, foreign-funded companies created most of China's trade surplus," Liu said. "They also benefited most from it."
Foreign companies currently account for over half of China's exports. In 2009, they contributed over two-thirds of China's trade surplus.
These enterprises acquired high profits from designing, research and development, as well as sales and marketing, leaving mere manufacturing fees to China.
He pointed out that foreign-funded companies have utilized China's advantages in labor, natural resources, policy and marketing to improve their competitiveness in the world market and boosted the industrial upgrade in their home countries.
Nearly all of the world's top 500 enterprises, 470 to be exact, have established branches in China. A report released by the American Chamber of Commerce in China showed that 74 percent of those surveyed profited from China, even in 2008, when they faced huge impacts from the global financial crisis. The European Union Chamber of Commerce in China also saw similar results from their surveys.
Mutually beneficial result
China's huge exports are mutually beneficial for both China and its overseas markets, said Liu.
Products with low prices and high quality exported from China have helped stabilize markets in the importing countries and also improved their livelihood. A research by Morgan Stanley showed that each U.S. citizen saved over 300 U.S. dollars annually, thanks to products exported from China.
He said that the challenges facing some developed countries are in fact the problems with their credit-driven economic structure.
"Once the global economic environment worsens, this system will be heavily affected, as there is no longer promising future income," Liu said. "These countries should look for problems with themselves, rather than transfer domestic conflicts to other countries."
Developed countries should lift export bans
According to Liu, China and the developed countries shall satisfy each others' needs through free trade, but they implemented strict and discriminative export restrictions, which lead to trade imbalances between them and China.
In 2007, the United States updated its export restrictions against China. Civilian technologies in the space and aviation sector and computer numerical-control machine tools with high accuracy are on the renewed list.
"Only by the lift of export ban of the products that China needs and with which they have comparative advantages, can they achieve export expansion and rebalance bilateral trade," Liu said.
During the global financial crisis, China sent several trade promotion delegations to Europe and the United States, and signed trade agreements of many other countries. In 2009, China was the top export destination of Japan, Australia, South Korea, the ASEAN, Brazil and South Africa.
"At this critical period of global recovery, China, as a responsible country, will expand its imports and stabilize the export sector, to play an active role for the stable rebound of global trade," he said.
(People's Daily Online, July 30, 2010)