China's Trade Balance Could Slide Into Deficit: Adviser
- 13 years ago
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China's massive trade surplus has helped it accumulate trillions of dollars in foreign cash reserves and led to rising pressure from the United States and Europe for the value of the yuan to be increased. But a monetary policy adviser to China's central bank has said falling exports could tip China's trading balance into a deficit next year for the first time in decades.
An adviser to the Chinese regime's central bank said the country's trade balance could move to a deficit next year due to falling exports to Europe and the United States.
It would be the first time China's economy would not be in surplus in two decades.
Head of the financial research institute and cabinet think tank, Xia Bin told Reuters the Chinese regime needed to have a proactive fiscal policy and reform the tax system to increase wages and local consumption.
Xia said, (quote)"The U.S. economy won't be good next year and Europe will be worse—meaning weak external demand for China. We can't rule out the possibility of a trade deficit."
He did not give a forecast, but said the country's restrictive monetary policy was "about the right tone."
Xia is part of a 15-member committee that advises The People's Bank of China on monetary policy, but has little influence on decisions.
He was visiting Taipei to talk about his new book. He expected China's economy to keep growing at 8 to 9 percent in 2012 and battle with inflation, which hit 6.5 percent in July last year.
Monetary policy remains tight in China although the central bank recently eased the burden on small business by loosening credit restrictions.
Reuters reports most economists it interviewed believed China's trade surplus would keep narrowing, but there was little chance of a deficit for years.
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China's massive trade surplus has helped it accumulate trillions of dollars in foreign cash reserves and led to rising pressure from the United States and Europe for the value of the yuan to be increased. But a monetary policy adviser to China's central bank has said falling exports could tip China's trading balance into a deficit next year for the first time in decades.
An adviser to the Chinese regime's central bank said the country's trade balance could move to a deficit next year due to falling exports to Europe and the United States.
It would be the first time China's economy would not be in surplus in two decades.
Head of the financial research institute and cabinet think tank, Xia Bin told Reuters the Chinese regime needed to have a proactive fiscal policy and reform the tax system to increase wages and local consumption.
Xia said, (quote)"The U.S. economy won't be good next year and Europe will be worse—meaning weak external demand for China. We can't rule out the possibility of a trade deficit."
He did not give a forecast, but said the country's restrictive monetary policy was "about the right tone."
Xia is part of a 15-member committee that advises The People's Bank of China on monetary policy, but has little influence on decisions.
He was visiting Taipei to talk about his new book. He expected China's economy to keep growing at 8 to 9 percent in 2012 and battle with inflation, which hit 6.5 percent in July last year.
Monetary policy remains tight in China although the central bank recently eased the burden on small business by loosening credit restrictions.
Reuters reports most economists it interviewed believed China's trade surplus would keep narrowing, but there was little chance of a deficit for years.