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China’s deputy central bank governor pledges to ease trade gap

MUMBAI - China’s deputy central bank governor on Thursday told bankers in India’s financial hub the country would aim to reduce a yawning trade gap with the US and other countries and open its economy further.

China has already taken measures to curtail the large trade surplus, Deputy Governor of the People’s Bank of China, Wu Xiaoling told reporters on the sidelines of a bankers’ conference.

China faces huge pressure on its balance of payments account which “is not good for the sustainable development of the country,” she said.

Last year, the United States recorded a record trade deficit with China of 232 billion dollars -- more than a quarter of its total imbalance.

The gap has led to repeated calls by US lawmakers for China to revalue its currency, the yuan, which they say is kept weak to encourage exports.

As well, in March Washington said it would slap duties on imports of Chinese coated paper, reversing a 23-year-old US policy of not applying duties to subsidised goods from so-called non-market economies such as China.

Wu added that in addition to opening the Chinese economy to greater foreign investment, more measures would be taken to enlarge domestic demand including its banking sector.

“We will encourage more foreign financial institutions to provide services in the hinterland and rural areas, and design products to support private consumption,” Wu said.

A stream of US delegations to China over the past few months have also called on Beijing to increase reforms in the financial sector to give greater flexibility to the yuan.

She said however that new steps on the exchange rate are not likely now, especially since the yuan gained nearly six percent against the dollar since July 2005 when it allowed the currency to trade in a wider band.