Trade Surplus In China Expected To Exceed $140 Billion In 2006

Growing trade surplus will probably stay the same due to increaded foreign investment in China.

BEIJING (AP) – China's trade surplus is expected to exceed $140 billion this year, according to a statement made by Fu Ziying, China's Assistant Minister of Commerce.

Fu said the trade surplus will remain for ''a quite long period of time,'' partly because China has become a manufacturing center for Western countries due to its low labor costs.

Previously released government statistics showed that in the first nine months of the year, exports exceeded imports by $110.9 billion, surpassing the all-time high trade gap of $102 billion in 2005.

China's total trade will likely reach $1.7 trillion this year, Fu said.

Foreign direct investment into China is expected to continue to exceed $60 billion this year, outpacing an expected $16 billion in outward direct investment made by Chinese companies in 2006, he said.

Fu said China hopes to boost the trade balance by stimulating internal demand through better coordination of its fiscal, monetary, and trade policies, while curbing rapid export growth.

''Foreign exchange policy as well as export and import tax policy are important components of China's macroeconomic control steps and can effectively boost the equilibrium of international balance of payment,'' he said.

China's growing trade surplus has been a sore point in relations with its major trading partners, particularly the U.S., and has added pressure on the country to allow the value of its currency, the yuan, to rise. That would make its exports more expensive and imports into China more competitive.

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