China is making a progress in balancing its trade position as companies target domestic consumers, and its trade surplus will fall to $150 billion this year, China's central bank adviser said.
Data earlier this month showed Beijing's efforts to raise imports to be bearing fruit -- its surplus with trading partners narrowed for the second straight year in 2010 to $183 billion from a peak of $300 billion in 2008.
Li Daokui, academic adviser to the People's Bank of China, also said the country's adjustment in nominal exchange rates would affect general trade but not processed trade, where China assembles goods made elsewhere and exports them.
It's my personal forecast that trade surplus will go down to $150 billion... The trade surplus is now just above 3 percent but it will go down to 2 percent this year and even below 1 percent in 2-3 years, Li said on the sidelines of the annual World Economic Forum in the Swiss resort of Davos.
We have a labor shortage and the export sector is changing itself, to sell more domestically... be it fishing, home appliances or automobile sectors.
China has repeatedly pledged to balance its trade account by importing more, in part due to pressure from trade partners to pull more weight as a consumer, and as it seeks to reduce its economic dependence on exports. Efforts to raise imports are paying off, with China's global trade surplus narrowing in 2010 for the second straight year from $196 billion in 2009.
In a panel discussing China's exchange rate policy at the Davos forum on Friday, some Chinese panelists clashed with Washington policy-watchers who urged Beijing to move faster to strengthen the yuan.
Yu Yongding, former PBOC adviser and influential economist in the Chinese Academy of Social Sciences, a government think-tank, said inflationary pressures will likely lead to a faster rate of appreciation in the yuan. China is facing inflationary pressures. It's extremely rational to have a faster appreciation. It's in China's interest, he said.
Li said that in China market forces are already playing a part in adjusting imbalances but a big-bang appreciation of, for example, 20 percent was unlikely to help as exporters still had to sell abroad.