Trade surplus means that a country's total export trade is greater than its total import trade in a specific year, also known as "surplus", which means that the country's foreign trade is in a favorable position in that year. The size of the trade surplus largely reflects a country's foreign trade activities in a specific year. Under normal circumstances, it is not appropriate for a country to maintain a large foreign trade surplus for a long time, because it is easy to cause friction with relevant trading partners. For example, one of the main reasons for the market fluctuation of bilateral relations between the United States and Japan is that Japan has been in a huge surplus for a long time. At the same time, a large amount of foreign exchange surplus usually leads to the increase of local currency in a country's market, which is easy to cause inflationary pressure and is not conducive to the sustained and healthy development of the national economy.
Trade surplus refers to the fact that within a certain unit time (usually calculated on an annual basis), both trading parties buy and sell various commodities and import and export each other. Party A's export amount is greater than Party B's, or Party A's import amount is less than Party B's. This difference is called trade surplus for Party A, and on the contrary, it is called trade deficit for Party B. Generally speaking, as far as the interests of both trading parties are concerned, the one who gets the trade surplus is the one who takes advantage, and the one who gets the trade deficit is the one who suffers. It can be seen that trade is to make money. On the other hand, the party with a trade surplus has made a net profit; On the other hand, the party with a trade deficit paid a net amount.
The more trade surplus is not necessarily good, too high trade surplus is a dangerous thing, which means that the growth of domestic economy is more dependent on external demand than at any time in the past few years, and the dependence on foreign countries is too high. The huge trade surplus has also brought about the expansion of foreign exchange reserves, which has brought greater appreciation pressure to the RMB, and also given the international trade protectionist forces an excuse to reflect the undervaluation of the RMB with the huge trade surplus. This has increased the pressure of RMB appreciation and financial risks, and increased the cost and difficulty of RMB exchange rate mechanism reform. The relatively simple countermeasure is to stimulate domestic consumption.
China's foreign exchange reserves have exceeded one trillion, which is a long-awaited change, because the data has shown that China's foreign exchange reserves are growing steadily. According to the definition, foreign exchange reserves are the result of the sum of current account surplus and capital account private transaction surplus. Statistically, China's foreign exchange reserves are mainly caused by the huge surplus in the trade account, while the surplus in the trade account is mainly the surplus in processing trade. According to the calculation results, non-processing trade basically conforms to the double-gap model in traditional economics, and it is a continuous and expanding deficit, that is, processing trade leads to trade surplus, and trade surplus leads to current account surplus. This is one aspect. On the other hand, the capital account, mainly FDI, leads to an increase in the net inflow of private account capital, which leads to a surge in foreign exchange reserves.
Because China's double surplus and the United States' double deficit are actually two sides of the same problem, which can be said to be "mirror images" and symmetrical problems. Why is this problem? Simply put, there are two reasons:
On the one hand, the reason is positive because of the expansion of economic globalization. An important feature of local economic globalization is that different processes of a product are distributed to different countries. The rise of China and the former Four Little Dragons in Asia is mainly due to the labor-intensive process of contracting and undertaking some important manufacturing products, thus cutting into the global supply chain. In the early stage of economic development, because your comparative advantage is mainly at the end of these processing links, close to the final assembly, this pattern of intra-product division of labor, and the positioning of some developing countries like China, led to more processing trade surplus in this country at a certain stage, resulting in current account surplus. This change, at a certain stage, resulted in a trade surplus due to the global division of labor, which is a positive phenomenon. On the other hand, some deficits in the United States have increased, which is actually a phenomenon of deepening globalization. In this sense, I think the so-called global imbalance, in a sense, may be put in double quotes. In fact, this is the "proper meaning" of deepening economic globalization, just like saying that there is no reason to say that there must be a trade balance within a country and between different provinces. This is one aspect.
The second aspect is also related to the undervaluation of China's real exchange rate. The underestimation of the real exchange rate can be studied theoretically and empirically. However, the undervaluation of China's real exchange rate is not the result of deliberate manipulation by the China administration. On the contrary, the situation in China is changing too fast. In the past few years, the exchange rate may be overvalued, but with the changes of internal and external economic environment, it began to be undervalued. Because the adjustment of the fixed exchange rate system, or the withdrawal of the pegged exchange rate system, is a very painful and difficult process in any country, China carefully considered this issue for two or three years before making the adjustment. The underestimation of the real exchange rate is also an important factor leading to the extraordinary growth of foreign exchange reserves, so simply speaking, it is a positive and economically reasonable phenomenon in the current economic globalization. On the other hand, there are also reasons why exchange rate policies are incompatible.
As a backward country, especially a big and poor country like China, the economic take-off cannot be a path of balance or trade deficit, but a path of long-term current account surplus. Only in this way can we gradually establish our own credibility in the international arena, gradually change the international pattern, and gradually establish our ability to borrow money in the international arena. Because if such a country wants to develop, it is difficult to achieve a completely balanced development path first. If there is an imbalance, one is a deficit and the other is a surplus. If there is a deficit, the world financial market is so developed and there are so many hot money, which is speculated among countries. If there is a deficit, it is easy to fluctuate in the financial market in the short term. Therefore, Japan, South Korea, Singapore and other countries taking off at high speed are taking this road. From the macro level, from the development pattern and from the development strategy, this is an inevitable and insurmountable stage. Therefore, some trade surplus appears in this process, which is inevitable and, in a sense, necessary or necessary. It is through this so-called economic imbalance that China's trade surplus, China subsidizes the United States and China's economy subsidizes the world economy that China's economy can break this world pattern, which is an inevitable process from passive to active.
The characteristics of contemporary globalization are significantly different from those before World War II or in the 1960s in micro-level and division of labor. In the past, different products were mainly divided into different countries, but after the 1960s, especially after the United States implemented the 98 10 tariff clause to promote outsourcing, it became the division of labor in different countries and different processes. To put it simply, in the 1960s, in the face of the changes in the comparative advantages of some products, the United States adopted a very simple but important policy, which was to encourage some processes, such as garment industry and electronic products, mainly some assembly processes, to be processed abroad. The method adopted by the United States is very simple, that is, assemble the exported spare parts and middleware and come back. I only levy tariffs on the value-added part of your assembly, and I don't levy taxes on the part that goes out, because there is no way to levy taxes, and you can't get out if you levy taxes. So in fact, I want to develop some technologies, but at that time, it was difficult to catch up with the import substitution strategy of developing countries, especially the four little dragons in Asia, because these countries are relatively small and cannot engage in import substitution for a long time. How can a country like Singapore engage in import substitution for a long time? Unlike China and India, we can do this all the time. For example, if we want to develop the aviation industry, how can Singapore do import substitution? The plane will land in the sky, so small countries knew that these import substitutions could not be completed, so they changed their policies early and echoed American outsourcing. It's like saying that the United States says I want to tango and other countries dance together. I think this may be an important reason for the rise of the four little dragons in Asia. Because in the standard theory of development economics after World War II, if you want to play export and export-oriented economic policies, you can't play. If you play, you will die. You will eventually become his colony, and you can't beat him. Because it was a product-to-product division of labor at that time, it was difficult for developing countries to find a product that you had an advantage and could compete with developed countries. But once in the product, although the car is very complicated, you may not be able to play with some parts of the car. Although electronic products are complicated, you may not be able to play with the assembly of electronic products. Although the processing of some raw materials of textiles is actually quite capital-intensive, you can play with the sewing of textiles. I think this is the key. After the success of the Four Little Dragons in Asia and the reform and opening up in China after the Cultural Revolution, we learned their experience, so China got up. When China got up, it was definitely labor-intensive at the beginning, and the labor-intensive parts of the manufacturing industry were often in the process of assembly or close to assembly. So now the trade surplus of other countries has shifted to China. In this context, we can have a very simple understanding, which explains why China's trade surplus will increase when the intra-product division of labor develops to a certain stage, and the increase of these trade surpluses is realized through processing trade. This is a ...
From this perspective, if China is successful, it will certainly go to the supply chain like Singapore, Taiwan Province Province and South Korea. When you stop assembling, it is very likely that the import and export will gradually balance, and your processing trade surplus will gradually shrink. I specialize in processing trade. In the past decades, the added value of China's processing trade has basically increased by one percentage point every year. When the added value of processing trade reaches a certain level, it is not called processing trade. Because if this added value is mainly realized in your country, it is not called processing trade according to the rules of origin. What do you mean, not processing trade? In the end, your trade surplus will change with the change of industrial structure, with the change of trade structure, and especially with the change of the relative position of industries with comparative advantages in your country in the whole supply chain. This is a dynamic process. In fact, we often go to enterprises to see. This change happens every day, but it also takes a process to realize. So to answer your question, on the one hand, we can understand the current trade surplus and foreign exchange reserves from this angle, and also observe the future changes from this angle.
Up to now, China has taken the development path of a small newly industrialized country, engaged in processing trade. But what is this? Compared with Singapore, South Korea and Taiwan Province Province of China, China's economy is completely different. We play this game and engage in processing, hoping to upgrade our industry. If you go this way, I'm afraid not. Why? Now we have become the third largest trading country in the world, the second largest country immediately, and the largest country in ten years, which has caused so many trade frictions. If we rely on the adjustment process of the natural market and our industrial upgrading to transfer the processing to India, Viet Nam and Cambodia, I'm afraid this road will be too long, and in the process, it will cause a lot of trade frictions, which will even cause a lot of interference to the economic development of China and a lot of welfare losses. So I think since we are a big country, on the one hand, we should continue to take this road in international trade, but on the other hand, we should also focus on developing our own domestic market. Our eastern, central and western regions are three worlds, in which we can carry out a lot of trade development and promote economic development.
In addition, in this process, I'm afraid we should consciously adopt some more active adjustment policies on trade issues than South Korea, Singapore and Japan. For example, for major trading partners, especially countries with very special status like the United States, I am afraid that special measures should be taken to reduce the trade surplus with them. For example, we should shop in America regularly. These purchases should not be temporary, but institutionalized. In particular, we should buy products from States with great political influence in the United States, including agricultural products. After consciously buying his products back, they may not be used directly or compete with our agriculture. We can process them into energy products, such as biodiesel and ethanol. Only in this way can we deal with the trade problems between China and the United States more actively, pertinently and actively, and can we fundamentally solve the trade friction. I am afraid it is unrealistic to just move the exchange rate and expect the exchange rate to appreciate in order to reduce the trade friction between China and the United States in the short and medium term. No one who studies it carefully has this conclusion, and those who have this conclusion generally can't handle it well in some technical aspects of econometrics. In addition, you can look at the example of Japan. In 1980s, there was a serious trade friction between Japan and the United States. Later, the yen appreciated by 200%, which solved the problem within two years, but it was still a trade surplus after two years. Therefore, we should make strategic, strategic and active adjustments to trade issues, and don't expect the exchange rate to adjust. If you ask me, in the next 10 years, 15 years and 20 years, the exchange rate should maintain a slow appreciation trend. It is this slow appreciation trend that is most beneficial to the whole economy. Only in the case of slow appreciation can our RMB be internationalized most easily and the balance of payments crisis can be avoided to some extent.
Why, as a developing country, China's foreign exchange reserves have soared. It is proved by strict data that this is unprecedented in history. For decades, among the 50 largest economies in the world, no country or region has had such a continuous double surplus performance. According to the standard economic theory and the basic model of development economics, a developing country should be "a deficit and a surplus", usually a current account deficit and a capital account surplus. The reason behind this should be easy to understand. Because developing countries have better growth, there is reason to borrow money to promote the economic growth of your country. In view of such theoretical assumptions and such empirical data, the phenomenon in China is very special. Observe it first and then explain it. Explain from two angles, one is the background of globalization. To a certain extent, China has accumulated more foreign exchange reserves in a certain period, which may be a phenomenon with economic rationality at the level of international division of labor. Because in the final analysis, this is a division of trade, which is considered a good thing in microeconomics, because generally speaking, voluntary trade is not forced trade, and of course it can't be so absolute, but it is rare to find such a proposition in economics, which can be widely accepted by economists: a voluntary trade, a trade developed on the basis of market economy, can usually bring efficiency improvement and interest increase to two or more participating countries, so
Due to the special orientation of intra-product division of labor at present, it leads to a trade surplus, and due to this orientation of China, it attracts a lot of foreign investment, which leads to a surplus in the capital account. In this sense, "double surplus" is reasonable.
On the other hand, the underestimation of the real exchange rate intensifies or makes the surplus grow too fast. The implication is that the real exchange rate needs to be adjusted. However, changes in China are very rapid. We should observe what happened first, and then analyze the reasons. On the basis of intra-product division of labor, this is reasonable, but in the sense that there is some imbalance in policies or the exchange rate is undervalued, it also needs to be dealt with through a series of policy adjustments.
For a big country like China, or for a big country like India, the imbalance of international payments can never be completely solved by a single policy means, and a comprehensive adjustment is necessary. We need to further reduce import barriers. The next step may be that China has gone through five stages of reform and opening-up, China has made great achievements in opening-up, and China has significantly improved its opening-up, but there are still significant barriers in many places. To change the view that imports were not good in the past, only exports were good. On the other hand, if the current foreign exchange reserves exceed one trillion, it shows that there is an obvious imbalance in China's international payments, and if this imbalance is to be adjusted, I think it is inevitable to consider the real exchange rate in the package of measures to adjust the international imbalance. Note that I am talking about the real exchange rate, and the adjustment of the real exchange rate is not necessarily achieved through the nominal exchange rate, so there are two issues to consider from the perspective of exchange rate and balance of payments:
The first question should be considered from the perspective of the real exchange rate, and the nominal exchange rate should be evaluated as a factor affecting the real exchange rate; The second question is to consider the relationship between the real exchange rate and economic growth, that is, we study the Balassa-Samuelson effect of international economics as a theoretical perspective. To think about the current development of China, it is necessary to establish a concept of real exchange rate, and then it needs to be reinterpreted or interpreted. RMB should try to avoid ups and downs, because China has another long-term goal, that is, RMB internationalization. If I have to choose, whether the RMB is undervalued or overvalued, I am willing to choose a little undervaluation. Don't be too absolute about this matter. The adjustment of RMB exchange rate should be gradual and slow, but from an academic point of view, if we think that RMB is undervalued by 20% or 30%, then it is no problem to adjust more at once. But it can also be understood that it should be a step-by-step process from the degree of operation, so that all aspects are more acceptable and the influence is more uniform. In addition, foreign countries always say that RMB is undervalued, which is also a good psychological expectation for the further internationalization of RMB in the future, but it will be adjusted after all.
First, according to the traditional development economics theory, a poor country and a developing country should borrow money, so they should attract foreign investment in the capital account. How to balance? There should be a trade deficit, just like the situation in the United States today. It is a standard economic theory to put the situation of the United States today in developing countries. Attract foreign capital, and then foreign capital will come in to make up your deficit. However, we should thoroughly reflect and study this theory, and discuss this issue from two aspects: empirical research and theoretical research. This is not right. A poor country, as its name implies, is a country with a backward economic system. How can you run a trade deficit in a poor country with a backward economic system, including a poor country with a backward financial system? How can I borrow money for a long time? There is only one positive conclusion, and that is the financial crisis. The financial crisis in Latin America, whether in Thailand or Indonesia, has come this way.
The second is also a misunderstanding, that is, the standard theory holds that the exchange rate and any price are the same. As long as the exchange rate changes, whether it is the nominal exchange rate or the real exchange rate, especially the real exchange rate, enterprises will respond immediately and make adjustments. I am afraid this also needs to be reconsidered.
Take China as an example. A large part of our surplus is processed exports. Let's ask, how did the processing export come from? It is attracting foreign investment, foreign direct investment and foreign direct investment. But does our local government 100% follow the market price signal in attracting foreign direct investment? Not exactly. As we all know, China's economy, including Malaysian and Singaporean economies, has a preference for foreign direct investment. Just like other situations, it prefers foreign companies to do it. We have seen many such examples. For example, our Xugong and Laigang are all led by local governments and introduce foreign capital. Maybe the bosses of state-owned enterprises were unwilling at that time. This preference is obvious. This FDI preference is caused by institutional factors, not price factors, not exchange rates, but political accounts and institutional accounts. Therefore, the preference for foreign businessmen is distorted by the system, which leads to our excessive export and excessive export processing. If this factor is only to adjust the exchange rate, it may be difficult to adjust it in the short term. In other words, the signal of exchange rate, even the real exchange rate, is not so smart for the real economy, for exporters and importers in the short term. Because China's economy is developing after all, its institutional system is not so sensitive to market signals, otherwise we wouldn't need to study development economics. In this respect, I think it is also worthy of our in-depth study, which is innovative and advanced in theory.
Looking back on the past year, China's import and export trade has greatly increased, but we have also found something special. China benefits from free trade, but it seems that the order of free trade is unfair. A spokesman for the Ministry of Commerce once mentioned that there was a trade friction between China and the European Union in shoes, but last year it was textiles. A spokesman for the Ministry of Commerce thinks that the EU is doing this at the expense of others, because EU countries produce few shoes and few employees, while China has a comparative advantage in this respect and the cost is lower.
Since 1994, China's current account and capital account have been in surplus every year. The trade surplus increased from1$22.2 billion in 1994 to1$774.6 billion in 2006. In the first half of this year, it reached1125.3 billion US dollars, greatly exceeding the scale of 6 145 billion US dollars in the same period last year. The amount of actually used foreign capital increased from 1.994 million USD to 735,248 USD in 2006. The double surplus increased the foreign exchange reserve from 5 1994 to166.3 billion at the end of 2006. By the end of June this year, China's foreign exchange reserves reached a new high, reaching1332.6 billion US dollars. The accumulation of foreign exchange reserves has increased the pressure of currency appreciation, leading to speculation of RMB appreciation. Although China's capital account is still under control, there are various ways to speculate in RMB under the condition of opening the current account, which is hard to prevent. After speculative funds come in, they will not only be satisfied with putting them in the bank as deposits to convert interest, but will try their best to find other high-return outlets, such as speculative real estate and stock market. So the current asset bubble may last for some time. After the speculative money came in, it was converted into RMB and put into the stock market and real estate market, which promoted the rise of asset prices.
The current account surplus is due to overcapacity caused by overheated investment and surge, and domestic consumption is relatively insufficient. Of course, to increase exports, this will lead to a surplus in the current account. At the same time, like the surplus in the capital account, in the early stage of reform and opening up, in order to overcome the bottleneck of foreign exchange shortage, China also formulated various tax refund policies to encourage exports in the mid-1980 s. 1998 during the east Asian financial crisis, the RMB insisted on not depreciating. In order to make up for the decrease of export competitiveness, the scope of export tax rebate has been strengthened, and these policies have been continuously used. In addition to internal factors, the current account surplus is also related to external factors that lead to the current account deficit, such as the low fiscal deficit and household savings rate in the United States, domestic demand is greater than domestic supply, and it can only be balanced by foreign supply. 199 1 year, the current account of the United States still has a surplus of 0.1%of GDP, and192 turned into a deficit of 0.8% of GDP 0.8% Since then, this deficit ratio has been rising all the way, reaching 6.6% in 2005. The United States is the largest economy in the world, and the trade deficit accounts for such a high proportion of GDP that other countries with close trade relations with the United States will inevitably have huge trade surpluses. Finally, the sharp increase of current account surplus since 2005 is related to the speculation of RMB exchange rate appreciation. China's capital account has not yet been opened, so investors can only remit foreign exchange to China and convert it into RMB by over-reporting the export value, under-reporting the import value, or transferring fake technology, which will increase the surplus of China's current account. Japan and Taiwan Province Province also experienced the same phenomenon when faced with the pressure of currency appreciation in 1980s.