The trade imbalance between China and the United States can not be solved by only relying on appreciation of the Chinese currency, according to Morgan Stanley's chief economist Stephen S. Roach.

At a Sino-U.S. financial symposium held in North China's port city of Tianjin, experts agreed that the RMB exchange rate was not the sole cause of U.S. trade deficit with China.

According to China's official statistics, the country's trade surplus with the U.S. was 80 billion U.S. dollars in 2004 and exceeded 110 billion U.S. dollars in 2005.

Some Americans attribute the increasing trade deficit mainly to the "undervaluing of the RMB" and so they have upped pressure on China to appreciate the yuan, said Roach.

In fact, a major part of China's trade surplus is created by multinationals as they eye low labor costs in the country and choose to produce their labor-intensive products in China, said

Wu Xiaoling, deputy governor of the People's Bank of China, the country's central bank.

Meanwhile, the United States restricts its exports of high-tech products to China, which also makes it lose its advantages in high-tech products trade with China, added Wu.

Last July, China put in place a managed floating exchange rate regime based on market supply and demand, raising the value of the RMB by 2 percent to 8.11 per U.S. dollar and linking it to a basket of currencies.

Wu said both China and the United States should make their own efforts to solve the trade imbalance partly resulting from differences in labor costs and technological development levels.

The United States should ease its restrictions on the export of high-tech products to China, while China will try to stimulate its domestic demand and increase imports, Wu said.

Source: Xinhua