More than a year of practice has proven it not easy to tackle trade surplus with the appreciation of Renminbi (RMB) yuan, according to a report released by the Research Institute of the Ministry of Commerce on July 16. The RMB exchange rate has been appreciated by a total of over 3 percent since July 21, 2005, but China's trade surplus reached 14.6 billion US dollars in July this year, breaking the record in June.

In 2005, China's total value of imports and exports for the whole year amounted to 1.42212 trillion US dollars in the wake of its fast expanding foreign trade. Trade surplus stood at 39.85 billion dollars in six months from January to June prior to the reform on exchange rate regime and, between July and December after the exchange rate reform, the surplus topped 62.26 billion dollars, or 22.41 billion dollars more than in the first half of the year. In the first six months of this year, however, the surplus rose to 61.45 billion dollars, a rise of 54.9 percent year-on-year. The surplus in June alone increased up to 14.5 billion dollars, being the country's 26th monthly surplus, or the fourth month trade surplus exceeding 10 billion dollars.

The original intention of China's exchange rate reform regime is to alleviate the so called underrated RMB exchange rate and cut the excessive trade surplus on one hand and, on the other, to accelerate the process of making the RMB exchange rate the market oriented, explained Liang Yanfen, director of the Research Division of the World Economics and Trade Research Office of the Research Institute under the Ministry of Commerce.

For nearly a year, China has released a series of reform measures to make its RMB exchange rate mechanism market-oriented gradually. The report of the Research Institute, nevertheless, shows a trend of weakening impact of the exchange rate on the setup of the world trade in recent years, but the impact of exchange rate on the trade of one nation poses by no means a simple question of inference. .

By People's Daily Online