Financial services and intellectual property rights are the two big barriers to solving the trade imbalance between China and the United States, says a signed article in China Business News. An excerpt follows:
China's Vice-Minister of Commerce Yi Xiaozhun and US Commerce Secretary Carlos Gutierrez co-presided over the signing ceremony of China's US$550 million purchase deal with the United States last Wednesday. This shows that the Chinese Government is taking concrete moves to rid the trade imbalance between the two countries.
China's trade surplus with the United States has long been a hot topic of discussion in the United States. Though the Chinese Government has taken a series of actions, this issue cannot be solved in a short time.
The US Government expects China to expand the opening of the service sector, especially the financial market. This could reduce the trade imbalance between the two countries and also provide the conditions for US companies to increase their market share in China.
But financial investment is different from traditional commodity trade. Financial investment concerns a country's economic arteries and affects its monetary policies and economic balance. China will not give up its dominance in financial services. The Chinese Government should be cautious in opening the financial market.
The Sino-US trade imbalance is increasingly shown in the field of intellectual property rights (IPR). The United States is gaining excessive monopoly profits through the export of IPR. Seemingly the export of IPR will help narrow China's trade surplus. But it will lead to an imbalance in the country's technical development and industrial structure as well as a brain drain. Therefore, the rapid increase of IPR trade will lead to a surplus for China in commodity trade.
The faster China opens its market for financial services and IPR trade, the more serious the imbalance in traditional service fields will be. The trade problems between China and the United States stem from different trade policies the two hold.
Developed countries are extremely competitive in financial services and IPR due to unfair trade barriers in these fields. The financial trade rules and the IPR system dominated by Western countries have become obstacles to global economic development. Developed countries have gained excessive profits in the development of software and financial derivative products through unfair rules. Thus it is only possible to change the imbalance in trade by eradicating unfair factors in the international trade rules.
(China Daily December 20, 2006)
