Funny how China’s trade surplus in March plunged to ‘only’ $US 6.87 billion from the second highest figure on record reached in February of just over $US23 billion.
The fall, revealed yesterday in figures released on the Chinese Customs Bureau website, came 10 days after the US stepped up pressure on China by announcing a switch from anti-dumping to countervailing duties on imports of coated paper because of claims of illegal Chinese Government assistance, and only hours after the US revealed it was going to complain to the World Trade Organisation about claims of piracy of movies, music, software and books in China.
Despite the fall in March, the first quarter trade surplus almost doubledto $US46.44 billion, compared to the surplus for the first quarter of 2006.
Some commentators claimed that Chinese exporters boosted shipments in January and February because they feared US retaliation and duties but that’s hindsight commentary. There was no mention of those factors in the chat about the huge January and the even larger February surpluses.
The US move to take its complaints to the WTO brought the expected aggrieved and concerned response from China.
The government said the US complaints “severely damage” trade relations. But as anyone who has been to China will confirm, it is easy to get hold of a wide range of products that are counterfeit which in the West would be covered by copyright protection.
Lowering the trade surplus is one way for China to ease not only the pressure from the US but the internal economic pressures, which at the moment are more threatening.
Chinese authorities late last week lifted the official reserve requirement to 10.6 per cent, the sixth such move in around a year and a sign of just how difficult reining in China’s investment and stockmarket booms is becoming.
China’s surplus hit a record $US177.5 billion in 2006 and although the March surplus fell 38 per cent smaller from March 2006, it will not continue at this low level for long.
September-November are the usual peak periods for China’s trade surplus as exports flood into western markets for the Christmas selling season.
China said exports rose just 6.9 per cent to $US83.4 billion in March: that was the slowest pace in five years. Imports rose more quickly, up 14.5 per cent to $US76.6 billion (Copper imports were a record).
China’s trade surplus with the US fell to $US9.5 billion in March from $US12.3 billion in February while that with Europe declined to $US6.4 billion from $US11.8 billion.
The US trade deficit with China jumped to a record $US232.5 billion last year and as the US moves into election mode for the 2008 Presidential poll, the Chinese Government had better be aware that it is going to become a favourite to blame for all the ills afflicting the US economic performance.
But the move by the Bush administration to lodge the two complaints with the World Trade Organisation will test China’s commitment to the organisation and freer international trade.
Unlike the move to levy countervailing duties on coated paper these complaints are a test of China’s commitment to being a member of the world trade club, if you like.
China wants to be a global economic power and if it is to succeed it has to stop ripping off other people’s work, even if some of the claims by the US on copyright of software are out of this world.
Commentators say the two US cases are the most legally contentious ever filed by the US against China and seek to force politically sensitive changes to cultural laws and the judicial system.
China says the US move”goes against the consensus reached between leaders of the two countries to resolve contradictions through dialogue”.
“China strongly requires the US side to reconsider the decision and make prompt changes,” the statement said.
Agreeing to the US pressure to liberalise its audio-visual market will meet serious resistance inBeijing because cultural matters(such as movies, DVDs, books etc) are seen as being political rather than economic policy decisions.
China after all isn’t a democracy or a free market economy; it is still a one party totalitarian state that wants to play in the Western world on its terms rather than change.
China understands what it has to do. Why else would it go through the charade that it did last week of changing thresholds and closing loopholes that impede prosecutions of copyright violations.
If China wants the continuing benefits of the WTO, it has to play by its rules.
