Lower export tax rebates would be a more effective way to curb China's foreign trade imbalance than a further appreciation of the currency, says a leading economics expert in the Xinhua-run Shanghai Securities News.

Dr. Zhao Qingming, a researcher with the China Construction Bank, writes in a commentary on Friday that cutting tax rebates would dampen export growth, shrinking the huge gap between exports and imports.

Small manufacturers that profit from low price advantages due to minimal labor costs, almost zero land costs, and evasion of pollution charges, would have to optimize operational structures if the revenue from tax rebate was reduced, he said.

That would send a clear signal to exporters that sustainable development was not dependent on vicious price wars, but on providing quality goods and services to make them more competitive.

A year after the one-off 2.1 percent revaluation of the yuan, the trade surplus was still surging, highlighting the ineffectiveness of currency appreciation in leveling the imbalance.

China's trade surplus in 2005 totaled 102 billion U.S. dollars, which included 67 billion dollars entering through the capital account, the paper quoted Stephen Green, an economist with the Standard Chartered Bank, as saying.

The trade surplus topped 61.45 billion dollars at the end of June, according to the National Bureau of Statistics. The government is still considering measures to counter the trade surplus.

Source: Xinhua