The U.S.-China trade gap likely to remain sizable

BEIJING - Just last month, China announced plans to buy $4.3 billion of U.S. technology as a way to show how serious it is about reducing the ballooning trade gap with the United States.

So it must have appeared as a mixed blessing in Beijing that China's trade surplus soared again in May to the third-highest monthly level on record, according to government figures released yesterday.

The overall surplus hit $22.5 billion, up 73 percent from May 2006, the Chinese customs agency said on its Web site. Exports jumped 28.7 percent to $94 billion, while imports rose 19.1 percent to $71.6 billion.

China has promised to narrow its yawning trade gap under pressure from Washington and other governments, but economists say multibillion-dollar surpluses are likely to continue.

The United States wants Beijing to raise the value of its currency, the yuan, which critics say is undervalued, giving Chinese exporters an unfair advantage. Several U.S. lawmakers are calling for punitive tariffs on Chinese goods if Beijing fails to act.

China ended the yuan's direct link to the dollar in July 2005 and raised its value 2.1 percent. Since then, the yuan has been allowed to rise about 5.7 percent in tightly controlled trading. It has traded recently at 7.65 to the dollar. Many economists say a change in the yuan's exchange rate, on its own, is unlikely to close the U.S. trade gap.

The United States reported a $232.5 billion trade deficit with China in 2006, and this year's figure is expected to surpass that.

President Hu Jintao's government insists it is not actively seeking a trade surplus and is taking steps to rein in booming exports by imposing taxes on steel shipments and repealing export rebates.

The European Union was China's biggest trading partner in the first five months of the year, with total two-way commerce rising 29 percent to $129.9 billion, according to the customs agency. It gave no breakdown of imports and exports.

The United States was in second place, with two-way trade rising 18.2 percent to $115.2 billion from January to May, the agency said. Japan was No. 3, with trade up 15.5 percent at $91.2 billion.

Beijing is trying to reduce dependence on exports by encouraging China's consumers to spend more, which would increase imports and narrow the trade gap. But that has had only limited success, with exports still growing much faster than domestic retail sales.