Guo Shuqing, deputy governor of the Peoples Bank of China, says that a huge balance-of-payments surplus is not a goal that China has pursued.
However, it is something that China has achieved, at least in the case of its bilateral trade with the US.
The US trade gap with China hit a record $16.8 billion in October, as US retailers like Wal-Mart and Kmart stocked their shelves for Christmas with cheap labor-intensive goods such as toys and shoes Made in China. US imports from China for the month (the latest data available) rose to a record $19.7 billion. That helped push the overall US trade deficit to a record $55.5 billion in October and a record $500.5 billion for 2004, with two months still to go.
The news could not have been particularly welcome to Guo, Chinas point man on the yuan in his role as director of the State Administration of Foreign Exchange. US and European exporters blame the low value of the yuan, which is pegged to the dollar, for keeping Chinas goods unfairly cheap.
Guo is the man who Western reporters corner at every Group of 10 meeting to badger about when China will revalue. Speaking on the sidelines of the G-10 meeting in Basel, Switzerland, in November, he said China had no timetable for a revaluation of its currency, although its policy is to move toward a market-based floating system.
For his part, Guo has never believed that an undervalued yuan has cost American or European or Japanese jobs. Even if the yuan appreciates by as much as 100%, it will not change the fact that the cost of Chinese labor is a fraction of that in the developed world, he says. The per-capita wage of Chinese workers in the manufacturing sector is only 3% of that of their American counterparts, he points out.
Exchange rates dont have a big impact on foreign trade, Guo says, and it seems clear that the man is in no hurry to tinker with Chinas exchange rate. While rumors in US markets have China revaluing in five or six months, Guo could be thinking in terms of five or six years.