Concern about China’s currency grows

MARK RALSTON/AFP/Getty Images In 2005, China’s trade surplus was “only” $102 billion. In 2006, it jumped to $177.5 billion. And now the numbers for 2007 have just come out: Last year, China’s trade surplus jumped 47 percent and is now an astonishing $263 billion.  But before you go jumping on the alarmist bandwagon about cheap ...

597138_maoyuan_05.jpg
597138_maoyuan_05.jpg

MARK RALSTON/AFP/Getty Images

MARK RALSTON/AFP/Getty Images

In 2005, China’s trade surplus was “only” $102 billion. In 2006, it jumped to $177.5 billion. And now the numbers for 2007 have just come out: Last year, China’s trade surplus jumped 47 percent and is now an astonishing $263 billion. 

But before you go jumping on the alarmist bandwagon about cheap Chinese goods flooding the global markets, know that in the last three months, import growth actually exceeded export growth. That means that means that the trade imbalance may be peaking. And that could be a good thing for everyone. Obviously, trading partners such as the United States have their own interests in seeing the trade surplus slow down. But inside China, there are also worries that the economy is growing too fast. Inflation in China is the highest it’s been in 11 years, and according to a recent public opinion survey, the number one thing that Chinese are most worried about is the rising prices of consumer goods.

Although the Chinese government has been making some moves in recent months to curb inflation—Prime Minister Wen Jiabao froze energy prices earlier this week, and Beijing has also been letting the yuan run up modestly—some economists think it’s not enough. Check out “China’s Currency Crunch” in the latest issue of FP. Marvin Goodfriend and Eswar Prasad argue that China needs to let the yuan float completely—not just because it would ease American concerns about unfair practices, but because it would be good for the Chinese themselves. Check it out.

Christine Y. Chen is a senior editor at Foreign Policy.

More from Foreign Policy

A photo collage illustration shows U.S. political figures plotted on a foreign-policy spectrum from most assertive to least. From left: Dick Cheney, Nikki Haley, Joe Biden, George H.W. Bush, Ron Desantis, Barack Obama, Donald Trump, Vivek Ramaswamy, and Bernie Sanders.
A photo collage illustration shows U.S. political figures plotted on a foreign-policy spectrum from most assertive to least. From left: Dick Cheney, Nikki Haley, Joe Biden, George H.W. Bush, Ron Desantis, Barack Obama, Donald Trump, Vivek Ramaswamy, and Bernie Sanders.

The Scrambled Spectrum of U.S. Foreign-Policy Thinking

Presidents, officials, and candidates tend to fall into six camps that don’t follow party lines.

A girl touches a photograph of her relative on the Memory Wall of Fallen Defenders of Ukraine in the Russian-Ukrainian war in Kyiv.
A girl touches a photograph of her relative on the Memory Wall of Fallen Defenders of Ukraine in the Russian-Ukrainian war in Kyiv.

What Does Victory Look Like in Ukraine?

Ukrainians differ on what would keep their nation safe from Russia.

A man is seen in profile standing several yards away from a prison.
A man is seen in profile standing several yards away from a prison.

The Biden Administration Is Dangerously Downplaying the Global Terrorism Threat

Today, there are more terror groups in existence, in more countries around the world, and with more territory under their control than ever before.

Then-Senate Foreign Relations Committee Chairman Bob Menendez arrives for a closed-door briefing by intelligence officials at the U.S. Capitol in Washington.
Then-Senate Foreign Relations Committee Chairman Bob Menendez arrives for a closed-door briefing by intelligence officials at the U.S. Capitol in Washington.

Blue Hawk Down

Sen. Bob Menendez’s indictment will shape the future of Congress’s foreign policy.