What are the advantages and disadvantages of trade surplus?
What are the advantages and disadvantages of trade surplus?
1. trade surplus promotes economic growth. First, the current account trade surplus stimulates economic growth. First, the current account trade surplus stimulates the total domestic demand and promotes economic growth. The current account trade surplus mainly comes from the increase of net export, which is the result of the rapid increase of China's foreign trade, especially export. The increase of net export makes the domestic total demand expand, and the expansion of domestic total demand promotes the national economic growth. Second, the multiplier effect of net export expands the scope of economic growth. The current account trade surplus is mainly the result of the increase in net exports. The increase of net export has the effect of foreign trade multiplier. Under the effect of foreign trade multiplier, the economic growth range is several times that of net export, which is greater than the current account trade surplus. Secondly, the surplus of capital account trade directly promotes economic growth. First, the surplus of capital account trade directly increases the total demand and promotes economic growth. The surplus of capital account trade originates from the increase of net capital inflow, and the result of FDI in China is the main part. The net inflow of capital increases the investment demand in the total domestic demand, and the increase of investment demand directly promotes the national economic growth. Second, the multiplier effect of FDI has expanded the scope of economic growth. Under the function of multiplier of FDI, the economic growth range is several times that of foreign direct investment, which is greater than the trade surplus of capital projects.
2. the trade surplus has increased foreign exchange reserves, strengthened comprehensive national strength, and is conducive to maintaining international reputation, improving foreign financing ability and foreign investment talent. Since 1994, except for the influence of Asian financial crisis and the deficit of capital account in 1998, China has been persisting in trade surplus. With the increase of trade surplus, foreign exchange reserves are also growing rapidly. At the end of 2003, foreign exchange reserves have exceeded US $40.1 billion. The increase of foreign exchange reserves is that it has improved the comprehensive national strength and made China in a more favorable position in economic globalization. Second, it indicates that China has a good international debt paying ability. When the international market stops financing, it can easily obtain various kinds of loans with lower capital. Third, the foreign investors who stop direct investment in China will have a sense of safety in the return of their profits to the state. These foreign businessmen are willing to inject capital more actively, which is conducive to the introduction of foreign capital.
3. trade surplus is conducive to the balance of economic total. The balance of economic aggregate is not only related to savings and investment, but also to foreign trade. When there is a deficit in the fiscal sector, under the condition that the savings are completely converted into investment, the demand will increase the import to compensate for the fiscal deficit, so as to maintain the balance of supply and demand of the total economic volume. In this way, it is easy to present the double deficit phenomenon of the coexistence of the fiscal deficit and the foreign trade deficit. When there is a deficit in the fiscal sector, in the case of the incomplete transformation of savings into investment, the demand for reducing imports or increasing exports (i.e. increasing net exports) can compensate for the fiscal deficit to ensure the balance of supply and demand of the total economic volume. China's ideal is that savings have not been completely converted into investment. Since 1998, the positive fiscal policy has been implemented in successive years. The fiscal deficit has increased year by year. Therefore, the increase of trade surplus, especially the increase of net export, partially compensated for the fiscal deficit. To compensate for the deficit with trade surplus is not only conducive to the balance of national economy, but also to prevent the phenomenon of double deficit.
4. the trade surplus has enhanced China's ability to fight the risks of economic globalization and helps the country's economy to be safe. The successive trade surplus has made China's foreign exchange reserves increase, making China a creditor in the world. Therefore, China not only has enough foreign exchange to meet the needs of foreign economic and trade, but also increases the ability of China to pay off foreign funds and ensure foreign payment, and is conducive to the international financial risks and the ability of the country to resist various economic risks.
5. the trade surplus is conducive to the stability of the exchange rate of money and the implementation of a relatively loose macro-control policy. First, the trade surplus makes the country have sufficient foreign exchange to intervene in the foreign exchange market and adhere to the stability of the exchange rate of money. Second, the state has sufficient foreign exchange to regulate the balance of payments and implement active foreign trade and trade policies. Third, the trade surplus has strengthened the effect of positive fiscal policy. As all levels of central government of China are trying to attract investment, China's capital activity is relatively large in practice. In the case of capital activity practice is relatively high, trade surplus has enhanced the effect of positive fiscal policy to stimulate the total demand, and promoted the rapid development of national economy.
1. the trade surplus makes the pressure of money appreciation increase and the friction of international trade increases.
The surplus of trade makes the foreign currency supply in the domestic foreign exchange market greater than the demand of foreign currency, which inevitably leads to the expectation of devaluation of foreign currency and the expectation of currency appreciation. Therefore, the trade surplus produces pressure on the appreciation of money: the greater the trade surplus, the greater the pressure on the appreciation of money; the expectation of the appreciation of money increases the inflow of foreign capital and the expansion of trade surplus, and further strengthens the pressure of money appreciation.
The trade surplus has intensified the friction of international trade. The increase of China's trade surplus means that there is a deficit with the countries that stop trade with China. The countries with deficit will apply WTO rules to restrict the import of Chinese products and maintain the domestic industry. After entering WTO, because of the large trade surplus between China and the United States, the United States is the most used anti-dumping, China is the most antidumping, ranking first among WTO members, and the number of cases of anti-dumping in China is increasing year by year.
2. trade surplus weakens the monetary policy effect and reduces the efficiency of social resources application. Foreign Exchange Inflow increases with the increase of trade surplus. Under the fixed exchange rate and foreign exchange settlement and sales system, the central bank should purchase foreign exchange with money, and the money input increases with the increase of foreign exchange inflow. With a large amount of money passively invested into the circulation category, the basic monetary accounts of the central bank are increasingly subject to the inflow of foreign exchange, which not only weakens the effect of monetary policy of the central bank, but also leads to the rise of price. The trade surplus is separated from the savings of domestic residents, which leads to the inefficient application of social resources. The trade surplus caused a large amount of foreign exchange reserves of more than $400billion, while domestic residents saved up to 11trillion yuan, and the sum of the two was about 14 trillion yuan. These 14 trillion dollars do not constitute effective investment, and are idle funds in economic and social. The idle funds correspond to the idle consumption materials and human resources, and the efficiency of social resources application is low. Therefore, China has a phenomenon of economic growth and unemployment increase.
3. the trade surplus has improved the foreign exchange reserve capital and increased the outflow of funds. It is always risky to stop foreign exchange operation in international financial market, and the most obvious is exchange rate risk. China implements fixed exchange rate pegged to the US dollar. Whenever the U. The larger the trade surplus, the more foreign exchange is needed to operate in the international financial market, the higher the capital and money the country has stored. The trade surplus increased the outflow of funds. Under the system of settlement and sale of foreign exchange, the inflow of foreign funds should be converted into foreign exchange storage, and the foreign exchange reserves mainly include the storage of US dollar and euro bonds. The more trade surplus, the more foreign exchange reserves, the more foreign bonds, the more capital outflow. These two aspects constitute internal contradictions: trade surplus leads to foreign capital inflow, more export and foreign direct investment, more capital inflow; trade surplus leads to increase of foreign exchange storage, more foreign exchange storage, more capital outflow.
4. trade surplus is unique, which makes it too dependent on foreign countries, narrow space for national economy development and difficult to adjust export structure.
5. trade surplus has affected the marketization process of interest rate in domestic financial industry.
Was this article helpful?
4 out of 4 found this helpful