honoluluadvertiser.com

Sponsored by:

Comment, blog & share photos

Log in | Become a member
The Honolulu Advertiser
Posted on: Saturday, May 12, 2007

China spins trade gap ahead of meeting

By Joe McDonald
Associated Press

BEIJING — It's a sign of the times when China's plans to buy a few billion dollars worth of U.S. goods gets announced with the fanfare normally reserved for much larger deals.

The point was to show that China knows it must make strides to equalize trade between the two nations, days before its negotiators travel to Washington to haggle with U.S. officials over trade.

But whatever good may have come from the 3-hour signing ceremony in California on Wednesday — when deals were announced for China to buy $4.3 billion of U.S. technology — probably evaporated yesterday, after China said it posted a $16.88 billion trade surplus in April, a good chunk of it likely from the U.S.

The April trade gap was below February's $23.7 billion — the second-highest level on record — but in line with steady increases in monthly trade surpluses over the past year.

The announcement by China's General Administration of Customs came against a backdrop of rising trade tensions between the world's No. 1 and No. 3 economies.

Chinese and U.S. trade envoys are due to meet May 23-24 in Washington for talks on Beijing's surpluses, currency controls, product piracy and other contentious issues.

Some U.S. lawmakers are pushing for punitive tariffs on imports of Chinese goods if Beijing fails to ease currency controls that critics say keep its currency undervalued, giving exporters an unfair price advantage and adding to China's trade surpluses.

Washington is hoping the "strategic economic dialogue," led by Treasury Secretary Henry Paulson and Chinese Vice Premier Wu Yi, helps mollify critics and avert disruption in trade ties.

Chinese President Hu Jintao made an unusual personal lobbying effort for the talks this week, expressing hopes for "positive progress" in a phone call with President Bush.

The Chinese government says it is not actively pursuing such large surpluses and has taken steps to reduce exports.

Beijing also is trying to slash reliance on exports by encouraging more domestic consumer spending, which could boost imports and narrow the trade gap. But an official campaign under way to cool off an economic boom has cut imports of factory equipment and other goods while foreign demand for low-cost Chinese products has surged ahead.

Exports in April rose 26.8 percent, while imports rose 21.3 percent, the General Administration of Customs said on its Web site.

The government reported a monthly trade surplus of just $6.9 billion in March.

Economists had projected a sharp jump in the trade surplus from March to April. They said the February surge was caused by exporters shipping more goods early to beat an expected change in taxes, leaving less to ship in March.

The April figure raised the country's accumulated trade surplus so far this year to $63 billion, the customs agency said.

China reported a global trade surplus in 2006 of $177.5 billion.

The Asian Development Bank said in a report in March that figure could balloon to more than $250 billion next year.

Last year, the United States reported a record $232.5 billion trade deficit with China. China's gap with the United States is bigger than its global surplus because it runs deficits with other countries.