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Gov't should try new approach to address trade imbalance
(Xinhua)
Updated: 2006-09-12 10:12

The government must try a new tactic to ease its trade imbalance, according to Chinese economic experts, following news that the trade surplus hit a record 18.8 billion U.S. dollars for the month of August, the third monthly record in succession.

"Restraining exports is not a smart option because rapid export growth is healthy and good for the Chinese economy, " said Dr. Shen Danyang, vice-president of the International Trade and Economic Research Institute under the Ministry of Commerce, said on Monday. "Expanding imports would be better approach."

Over the past four years, China has removed all export subsidies, slashed the average export tax rebates to 12 percent and imposed export tariffs on sensitive textile products.

"Stretching export control will not alleviate the trade imbalance," Shen said, stressing that rapid growth in both exports and imports is inevitable for an expanding economy.

The East Asian countries have set a good example in the 1970s, he said.

Citing statistics from the United Nations Trade and Development Conference, Shen said that the average annual growth rate of the Republic of Korea's exports was 31.9 percent while the import growth rate was 29.1 percent.

China's data shows that the country's exports surged 25.9 percent from January to August to 599.63 billion U.S. dollars while the imports amounted to 504.98 billion U.S. dollars, up 21.6 percent." There is still space for further expansion," Shen said.

Refuting the argument that rocketing imports and exports would consolidate China's dependence on foreign trade and endanger China's economy, Shen stressed that no country had found its economy jeopardized by a high dependence on foreign trade.

The economic dependence on foreign trade in the world's third largest economy Germany and Asia's emerging economy the Republic of Korea had remained above 60 percent for years, he said.

Under the global economy, countries across the world have sped up their foreign trade development. Statistics from the World Bank revealed that the world economy's dependence on exports edged up only six percent from 1820 to 1950. Over the past five decades however, the rise was as much as 14 percent, he noted.

"The issue which deserves our attention is not concerns over dependence on foreign trade but the risks caused by a decline in exports and flat domestic demand," Shen said.


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