China will significantly cool exports this year as it makes slashing its record trade surplus one of its most urgent tasks, Commerce Minister Bo Xilai said in comments published Tuesday.

“Cutting the huge trade surplus is the priority task for 2007,” the China Daily quoted Bo as saying.
“The yawning surplus with the United States and the European Union has strained China’s foreign trade environment, triggering more frequent trade friction.”

He warned that if steps were not taken to rein in China’s massive trade surplus — a record 177 billion dollars last year — it would widen to 300 billion dollars, turning “an economic problem into a political one”.

A large trade surplus was not good for China’s sustained economic growth and plans were afoot to “decisively” reduce exports of high-energy-consuming and low-value-added goods, Bo said.
Last year China sought to reduce the problem through tax and industrial policies in goods processing, a sector seen as low in value-added and blamed for about half of the trade surplus, the newspaper said.

To boost imports the government will relax restrictions and announce taxation and financial incentives, Bo said, without elaborating.

“We will largely increase imports which have high demand in China,” he said.

China’s trade surplus has been a consistent bone of contention with its biggest trading partners, particularly the United States, which has repeatedly warned that Beijing must take tougher action to reverse the trend.

 

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