Editorials

Needed stimulus

(China Daily)
Updated: 2010-08-20 06:10

A sweeping cut of import tariffs should not be introduced merely as a makeshift measure to offset mounting international pressure over China's surging trade surplus.

To boost domestic consumption into a key growth engine, Chinese policymakers must include more stimulus measures to encourage imports as part of the country's long-term development strategy.

The Ministry of Commerce announced on Tuesday that the Chinese government is planning to adopt measures during the rest of the year to boost demand for imports and balance foreign trade.

Such an official statement is ostensibly aimed at easing growing international concerns about China's trade surplus, which surged unexpectedly in July to an 18-month high of $28.7 billion. Last month, China's exports jumped 38.1 percent year on year to a record high of $145.5 billion, while imports dropped from 34.1 percent to 22.7 percent in June.

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While the world is expecting China to narrow its current account surplus to help address the global imbalance, the recent surge in China's trade surplus will surely disappoint some countries that are eager to cut their trade deficits.

Domestically, the trade surplus also threatens the hard-won progress that China has made in reducing its excessive dependence on external demand for growth.

Though export-led growth can currently help cushion the Chinese economy against a looming domestic slowdown, a swelling current account surplus is definitely no longer what the country needs most.

To pursue balanced growth powered by stronger domestic consumption, China has launched a series of import-oriented policies to lower overall tariffs to 9.8 percent.

More such stimulus measures will help trim the country's trade surplus, but a massive overhaul of the country's import policy is badly needed, now that the world export champion has decisively set out to change its growth pattern as well as the way it contributes to the world economy.

(China Daily 08/20/2010 page8)