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China to focus on cutting trade surplus

Workmen assemble street lights on a Beijing pavement yesterday. PHOTO: EPA

Chinese leaders pledged to cut the nation's soaring trade surplus in an economic plan for next year issued ahead of a visit next week by US Treasury Secretary Henry Paulson for talks on commerce and other contentious issues.

The plan, reported yesterday by state media, calls for boosting imports, with an aim to bring them in line with booming exports, and encouraging domestic consumption. It was issued after a three-day meeting this week led by President Hu Jintao (胡錦濤) and Premier Wen Jiabao (溫家寶).

"Chinese leaders pledged to redouble efforts to vigorously expand imports and overseas investment," the Xinhua news agency said.

The agency said they would make "balancing international payments a major goal for next year."

Paulson and Chinese leaders are due to hold talks next week in Bei-jing as part of a wide-ranging "strategic dialogue" on trade and other issues. Paulson is under pressure from US firms to take a hard line on currency policies and greater market access for foreign competitors.

China's latest plan is in line with the Chinese Communist Party's long-term goal of reducing reliance on exports and shifting the basis of economic growth to domestic consumer spending.

But it isn't clear how effectively it can be carried out because the government has been struggling to enforce directives on an economy that is increasingly driven by private business.

An effort this year to curb runaway growth in real estate investment and bank lending took six months to begin showing results. And that required Beijing to raise interest rates twice and impose multiple waves of increasingly drastic investment controls.

China's economy expanded by 10.7 percent in the first nine months of this year. Leaders want to continue fast growth to ease poverty but are trying to restrain industries such as real estate, auto manufacturing and textiles where they worry that spending on unneeded factories and other assets could fuel inflation or a debt crisis.

The latest plan was issued by the Central Economic Work Conference, a body created by the party to help manage the economy in which two decades of reforms have weakened state control.

The reports yesterday didn't say whether the plan sets an economic growth target. Earlier reports cited a party researcher who said planners called for growth to slow, setting a target of 8 percent next year.

The government said this week it expects China's global trade surplus to hit a record US$168 billion this year.

Washington and other trading partners are pressing Beijing to raise the value of its currency in order to encourage imports and to ease market access for foreign companies.

The flood of export revenues has strained Beijing's ability to restrain inflation pressures. The central bank has been forced to buy up tens of billions of dollars in foreign currency every month in order to control the growth of the money supply, piling up reserves estimated to have surpassed US$1 trillion.

Delegates at the planning conference recommended that China import more advanced technologies, management and foreign expertise, according to news reports. They also called for boosting consumption by creating more jobs for the rural and urban poor in order to raise incomes.
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