Trade with ASEAN needs yuan
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China's trade to the Association of Southeast Asian Nations (ASEAN) might be affected if the yuan continues to appreciate, an economist said Sunday at a forum in Nanning, Guangxi Zhuang Autonomous Region.
"This year, ASEAN is likely to surpass Japan to become China's third largest trading partner," Xu Ningning, executive secretary general of the China-ASEAN Business Council, told the Global Times. "If the yuan continues its revaluation, the trade to those countries will be affected."
In March, China's trade deficit with ASEAN was up by $2.7 billion, according to the Ministry of Commerce.
In the first five months of the year, the bilateral trade volume between China and ASEAN reached $52.7 billion, including $6.4 billion of China's trade deficit, which jumped from $1.09 billion compared with a year earlier.
According to data from the US-China Business Council, Sino-US trade reached the peak of $409.2 billion in 2008.
The figure plummeted to $366 billion in 2009, dropping by 10.6 percent, mostly due to yuan revaluation, according to analysts.
In June, the People's Bank of China (PBC), the central bank, added flexibility to the exchange rate and ensured that the yuan would appreciate gradually by 2 to 5 percent a year.
The International Monetary Fund said last month that a stronger yuan would help achieve China's goal of reducing dependence on exports and making its economy more self-reliant.
"The way to make up for the bigger trade deficit in manufacturing is to improve efficiency and technology," Xu said.
The yuan has gained 22 percent against the dollar since July 2005.
"If the yuan keeps appreciating, we will need to encourage domestic enterprises to go out and invest in other countries that have cheaper labor costs," Lü Yusheng, director of Guangxi Institute of Beibu Gulf Development, told the Global Times.
Last year China's foreign reserves jumped $453 billion, or nearly a quarter, to become the world largest of $2.4 trillion amid the global financial crisis, according to the PBC.
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