What are the reasons?

There are many reasons for that. As far as I'm concerned, inadequate domestic demand and the old growth model of foreign trade are the major reasons. These years, we have been working on how to change the foreign trade growth model but haven't had much success. What's more, the import and export imbalance brought about a huge trade surplus.

Before the 1990s, China underwent years of trade deficit. However, after the 1990s, more international factories moved to China and since then, China has become a major production base for the processing trade. The surplus rising from the processing trade accounted for a large proportion of the total trade surplus. One thing is particularly noticeable: The raw materials, spare parts and equipment needed for the processing trade were mostly imported from foreign countries. Meanwhile, the sluggish domestic demand hasn't done much to boost imports.

Facing a slowed world economy, sluggish U.S. market demand, increasing international trade frictions, as well as domestic problems including energy consumption, environmental protection and rising labor costs, and the difficulty in expanding domestic demand, China may feel it is difficult to solve the trade imbalance.

Some of the new policies made by the Ministry of Commerce encourage imports and control exports. Do you think those measures can change the trade imbalance?

Export control and renminbi appreciation are not the way out for resolving the trade imbalance. Our government has indeed promulgated measures to control exports and appreciate its currency in an effort to ease the trade tension. It turned out that those measures are not helpful, while also giving rise to some negative impact. For instance, some manufacturing enterprises moved outside the country and have posed certain negative influences on our economic development and employment.

In your opinion, how should China solve the trade imbalance?

I think we should adjust the trade structure and industrial structure, expand domestic demand, and increase imports so as to achieve balanced development.

We should control the export of resources and products with high pollution and high energy consumption; encourage the export of hi-tech, mechanical and electronic products; improve the technology content in the processing trade; improve the processing degree of agricultural products; and foster independent brands. I think those measures can ease the structural problem in the trade imbalance.

We should foster more brands of independent intellectual property rights by way of independent innovation. We should also enforce export competitiveness, improve export revenue and reduce trade friction.

Of all the Fortune Top 500 brands in 2005, the United States owned 249, France had 49, Japan yielded 45, but China only had four, which is out of line with its trade scale and position in the world. China is a trade power in quantity but weak in quality. We have to change this kind of trade growth model in order to strike a balance between our trading scale and our presence among top world players.