The RMB exchange rate is not the cause of the US' trade deficit with China, said Fu Qiangen, President of the US-China Joint Commission on Commerce and Trade, on September 11.

China's trade surplus with the US is at US$18.8 billion, the fourth month in a row the surplus has reached a new high, according to data released by Chinese Customs on September 11. The total of the surplus in the first eight months of the year is US$94.65 billion.

The Schumer-Graham proposal was put forward by two American senators -- Charles Schumer and Lindsay Graham -- and would mean adding a further 27.5 percent punitive tariff to Chinese goods exported to the United States, unless China significantly appreciates the RMB. US Congress will vote on the Schumer-Graham proposal before September 29.

"The US-China Joint Commission on Commerce and Trade rejects the introduction of measures that pressure the Chinese Government to revalue the RMB," said Fu. He said it is not clear whether Capital Hill will approve the proposal or not.

Stephen Roach, a top economist with Morgan Stanley, said recently that the fundamental cause of US trade deficits is the country's low savings and high consumption. The revaluation of the RMB against the US dollar might decrease US imports from China, but the US still needs to import goods from other countries. The deficit problem will not be so easily resolved.

By People's Daily Online