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China will step up measures to strike a basic balance in international payments this year, beforethe negative impact of persistent surpluses come into full play, Friday's China Daily reported.
The paper quoted Guo Shuqing, director of the State Administration of Foreign Exchange (SAFE), as saying Thursday that possible policy options include supporting high-tech and high value-added exports, slashing less competitive exports, encouraging imports on a selective basis, and tightening supervision of capital inflow, particularly short-term capital used in renminbi transactions.
Guo, also vice president of the People's Bank of China, said the policy package also included an improved renminbi exchange rate-forming mechanism "under the precondition of the basic stability of the exchange rate being maintained".
Trade and capital account surpluses in recent years brought China's foreign exchange reserves to 403.3 billion US dollars at the end of last year, the second-largest amount in the world following Japan.
Forex reserve hikes were even heftier in the past three years as businesses and individuals opted to hold renminbi and trim their forex assets in pursuit of the higher interest rate on renminbi deposits.
Some countries have stepped up pressure on the Chinese government to revalue the yuan, which they say is undervalued and has caused job losses in the United States.
The role of the renminbi's exchange rate in China's surpluses has been "enormously exaggerated," said the official.
A lower exchange rate theoretically stimulates exports and restricts imports. But when the renminbi's exchange rate averaged lower last year, China's exports and imports both accelerated, with import growth outstripping export growth by 5.3 percentage points.
"This is mainly because there are many factors that can affect exports and imports, and the effect of the exchange rate can be offset by other factors," Guo said.


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