BEIJING, May 29 -- Floating exchange rate is not enough to address the imbalanced international payment account. Structural adjustment of the economy is also necessary. However, the U.S. is very slow on this regard. It is irresponsible to pin hopes on dollar depreciation against other currencies to solve the imbalance.

    Ba Shusong, researcher with the State Council Development Research Center, gives his perception about the Sino-US trade.

    The international economic landscape where the U.S. is the consumer, Asia is the producer and Europe is the capital provider is in the advantage of the U.S. The world trade, capital flow and foreign asset holdings transfer benefits of Asia and Europe to the US.

    For example, in China's trade surplus, China exports to the U.S. at very low prices and invests a considerable part of its foreign reserves rewarded from the exports in the U.S. market. As a result, the U.S. gets both Chinese commodities and Chinese deposits at very costs.

    The influx of Asian foreign reserves, from China in particular, as well as the petrodollar, has helped the U.S to great extent keep its medium and long term interests rates relatively low.

    Another analogue about the scenario is that the U.S. is a minter while huge forex reserve holders like China receive and accumulate "junk dollars". Junk dollars mean the weak purchasing power of the dollar.

    China's forex reserves are not growing fast as it looks in terms of oil and gold.

    From the perspective of the macro-balance, American's massive trade deficit, under the context of the globalization, suggests their use of massive deposits. That means the deposits are also globalized and thus re-located word wide.

    The U.S. has attracted more world deposits than any other economy with its dollar dominance, developed financial market, efficient deposit placement mechanism. All of that has made dollar "a spoiled child".

    Deposits flooded from the world needs trade deficits to balance.

    China's trade surplus with the U.S. is also a natural result of the industrial adjustment under the globalization. The tremendous market demand and cheap, competitive labor cost are the most important drivers of China's rise on the world market.

    However, the number of China's trade surplus with the US. which stands at 114 billion US dollars does not tell the full story. From a global view, the surplus is structural. The U.S. trade deficit with the East Asia does not grow simultaneously and even slips in the U.S. total trade deficit when the U.S. makes more deficits in its trade with China.

    That indicates the global industrial structural adjustment, that in Asia particularly, has shifted the U.S. trade deficit to China from South Korea and Japan.

    In conclusion, the U.S. trade deficit and China's surplus are the result of the economic globalization, the global relocation of deposit and the world industrial structural adjustment and will not be changed by any unilateral actions in a short period of time.

    Americans are the best beneficiary in that scenario. It has been recognized that the drain of benefits and the huge U.S. trade deficit are unfair and not balanced.

    But it is not possible for China or the U.S. to change that over a night through unilateral actions by either side alone. Nor will value changes on exchange rate work. Steps must be taken to restructure the economy.

    (Source: People's Daily Online)