Around the traditional Spring Festival period, due to holidays and changes in employment, China's exports generally decrease while imports expand as a result of festival consumption. This leads to a narrowed trade surplus or a widened deficit.
According to China's lunar calendar, the Spring Festival period this year, which ended in the middle of February, was much earlier than last year's, which was prolonged until early March. The "Spring Festival effect" had entirely disappeared by March this year.
Given the unchangeable fact of a fairly big trade surplus growth in March and the first quarter, China should handle its foreign trade philosophy carefully.
A huge trade surplus, undoubtedly, would not be sustainable in the long term. It is absolutely right to seek a balance of international payments.
However, the fact that we should try to achieve such a medium- and long-term target should not be interpreted as having to view it as a short-term task and achieve it in the short run.
We should note that we have multiple policy targets. The efforts to narrow the trade surplus, to an extent, conflict with economic growth, employment and upgrading the industrial structure.
Net exports played a significant role in driving China's economic growth last year. In the medium and long term, we need to replace foreign demand with domestic demand to push our economic growth. However, it is hard to realize it in the short term, because a large-scale increase in investment would further deteriorate the country's already serious excessive production.
And consumption growth hinges on an improved income distribution structure and social security network, both of which cannot be achieved within a short period.
Therefore, if we rush to take drastic measures to forcibly narrow the trade surplus, we will risk derailing the economy.
The United States and Europe are the major trade partners of China and also the main source of China's trade surplus. The surplus is mainly attributable to the internal economic situation of those countries.
The macro economies of the United States and Europe are faring soundly, which determines that their imports and trade scale would not decrease significantly. If China blindly sticks to a policy of forcing down its trade surplus, it may lose the two markets that it could have won through fair competition.
Analysis of the growth of the processing trade and general trade indicates that China's foreign trade is displaying positive growth trends. General trade is resurging and the value added by domestic processing trade is increasing.
In the long term, those positive growth trends would contribute to China's position in the international division of labour and the steady and sustainable growth of the Chinese economy.
We should not seek a trade surplus, of course. But in achieving a trade balance, we should not jeopardize our long-term development goals.
For that reason, at least this year, we should not simply force down exports to decrease the trade surplus in order to balance foreign trade.
The author is an associate research fellow with the Chinese Academy of International Trade and Economic Co-operation.
