Global Imbalance: A Result of Single Currency Dominance in International System
China’s surplus isn’t a consequence of the global trade order but of the inherent features of the international monetary system. This perspective was affirmed by the governor of the People’s Bank of China (PBoC), Pan Gongsheng. Speaking at the annual China Development Forum in Beijing, Pan pointed out that the international monetary system’s structure played a more significant role in creating global trade imbalances than individual countries’ choices.
The People’s Bank of China
Not Just an Issue of Global Trade Order
The PBoC governor argued that China’s trade surplus should not be seen merely as a result of the global trade order. Instead, he emphasized that the global trade imbalance is a direct result of the international monetary system’s inherent features. His argument dislodged the widely held belief that trade surpluses were purely the result of individual countries’ choices.
Decoding the Global Trade Imbalance
According to Pan, over the past 40 years, the world’s surplus countries have generally had strong economies. This correlation suggests that economic strength and having a trade surplus go hand in hand. Therefore, it’s not just about the choices individual countries make; the international monetary system’s structure also plays a critical role.
By understanding the structure of the international monetary system and acknowledging the role it plays in creating trade imbalances, countries can make more informed decisions. This understanding can help them develop strategies that promote economic growth and stability, benefiting both their economies and the global economy.
For further information about this topic, you can find the original source here.
