Chinese Premier Li Qiang (李強) pledged to address worries that trade partners have about China’s large surplus, underscoring Beijing’s concern the issue could disrupt relations with more nations during a truce with the US in the tariff dispute.
“We take our trading partners’ concerns seriously and we are ready to work with all parties to promote the sound and balanced development of trade,” Li said in a keynote speech at the China Development Forum in Beijing on Sunday.
“We will also further widen market access for the services sector and increase imports of medical and health care products, digital technologies and low carbon services to provide more business opportunities for foreign companies,” he added.
Photo: Bloomberg
China racked up a record trade surplus of US$1.2 trillion last year and exports continued to surge in the first two months of this year, exacerbating worry in many countries around the world about the future of their own industries.
Authorities in China have taken some steps to address the rising trade tensions, including by reducing export tax rebates for hundreds of products such as solar cells and batteries.
The manufacturing strength comes with the economy troubled by weak domestic consumption. Industries including solar are also struggling with overcapacity and intense price competition.
Beijing has made progress in curbing so called involution style competition, Li said.
At the same forum, People’s Bank of China Governor Pan Gongsheng (潘功勝) defended his nation’s current account surplus, saying it “is allocated to different regions and industries worldwide through foreign investment by Chinese enterprises and the banks.”
He added that the surplus “has underpinned global economic growth and financial stability.”
Pan also mentioned a slew of “non-economic factors” that damaged global economic balances, including front-loading of Chinese exports triggered by US tariffs, and export controls that distorted business and household expectations.
IMF first deputy managing director Dan Katz said at the forum that Beijing “can do more to increase consumption and domestic demand — especially for services — by boosting household incomes and reducing incentives for precautionary savings.”
This would entail “shifting resources away from industrial subsidies and infrastructure and toward social safety net programs and stabilizing the property sector to give citizens the confidence to spend more and save less,” he added.
It would also mean moving the tax burden from middle-class households toward better off ones, and cutting exemptions for corporates.
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