Focus on yuan misguided; investment and domestic consumption, not exports, are engines of economy

China registered a monthly trade deficit of $7.2 billion in March this year, its first since April 2004. Yet, at around the same time, the United States Congress issued its loudest call ever to classify China as an exchange-rate manipulator, accusing Chinese leaders of maintaining the yuan's peg to the dollar in order to guarantee a permanent bilateral trade surplus.

China's March trade deficit indicates, first of all, that it is incorrect to claim that Chinese economic growth depends mainly on exports. Exports are an important part of the Chinese economy, and any global market fluctuation or external shock will certainly have an impact on overall growth. But, like any other large economy, China's economy is driven by domestic consumption and investment.