Experts: US trade deficit not linked with RMB value







A speech arguing that the RMB exchange rate does not relate to the China-US trade imbalance was delivered by He Weiwen, general-secrectary of the organization committee of the China-US Business Forum.



His insights are based on his analysis on the records of the China-US trade. Citing that the US exports to China soared 145 percent accumulatively in seven years between 1997 and 2004, he reasoned that the opposite scenario, that is, a slowdown of the US exports, would have occurred if the RMB had been undervalued. The fact is the US global exports would have increased by 19 percent over the seven years if its exports to China had not been taken into account. That means the growth rate of its exports to China is 7.6 times as fast as that of its exports to the rest of the world.



The two day forum, from Feb. 14 to 15, was sponsored in Beijing By People's Daily and the China General Chamber of Commerce in the USA. The day before the forum the White House put forward its economic review to the Congress. On Tuesday US Trade Representative Office announced to establish a China-specific taskforce on trade rules compliance after its release of a report of trade relations with China.



Professor Robert Mundell from the Colombia University who is also Nobel laureate for economics reviewed the currency shortage between 1938 and 1955 in the US and the enormous trade surplus held by Japan and Germany between 1950s' and 1970s'. None of these cases led to appreciation of their currencies.



Chinese vice Commerce Minister Yi Xiaozhun highlighted China's efforts on reducing the US trade deficit with China. Last year China overtook Britain to be the fourth largest market and the fastest growing market for the US exports. China also placed nearly 4 billion USD worth of orders on Boeing planes last year, pushing China's procurement of US products up to 9.5 billion USD.



China has long been the largest importer of American soy bean and cotton.



Yi has also proved with data that 58 percent of China's exports were made by foreign-funded companies in China, especially US firms, and 83 percent of China's trade surplus went to those foreign firms in China.



By People's Daily Online

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