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          CHINA / Foreign Media on China

          China's trade surplus with US surged in March
          By KEITH BRADSHER (The New York Times)
          Updated: 2006-04-12 14:52

          China disclosed Tuesday that its trade surplus surged to $11.19 billion in March, its second-highest monthly surplus ever and a level that could feed trade frictions in advance of President Hu Jintao's visit to the United States next week.

          The surplus more than doubled over March of last year on soaring exports and slowing growth in imports, and nearly matched China's record monthly trade surplus of $12.02 billion, set last October.

          The March figures were especially significant because China usually runs only modest surpluses or even deficits in the first quarter. In the second quarter, factories step up their shipments to the United States and Europe of things like toys and DVD players, in preparation for the holiday retail season.

          President Hu is scheduled to visit Seattle and then Washington during a four-day visit starting April 18, and China's trade and currency are likely to be issues. The visit was a factor in China's agreement, announced Tuesday, to crack down on copyright piracy of American computer programs and to lift a ban on American beef.

          The Bush administration said the Chinese pledged to require that computers use legal software and to close optical disk plants that are producing pirated CD's and DVD's.

          In Washington, the Treasury Department is in the final stages of deciding whether to accuse China of manipulating the value of its currency — keeping the yuan artificially cheap to maintain the competitiveness of Chinese exports despite rising wages and raw material costs in China.

          The yuan was trading at 8.0087 to the dollar in late-afternoon trading in Shanghai on Tuesday, and is widely expected by traders to ease through the psychologically important level of 8. China revalued the yuan by 2.1 percent against the dollar last July 21, and it has appreciated an additional 1.27 percent since then.

          Larry M. Wortzel, the chairman of the United States-China Economic and Security Review Commission, which was created by Congress to monitor and report on the bilateral relationship, said that the political impact of the latest trade figures might be limited. "It's a good time for them to release those numbers because Congress just went out on a two-week break, and domestically the nation is transfixed with immigration reform," he said.

          Jing Ulrich, the chairwoman of China equities at J. P. Morgan Securities (Asia Pacific), said the profitability of Chinese exporters had slumped in the last year because of higher costs for wages and materials together with the refusal of American retailers to pay higher prices. "There is a lot of pressure on Chinese manufacturers," she said.

          Exports rose 28.2 percent from a year earlier, to $78.05 billion, while imports climbed 21.3 percent, to $66.86 billion.

          Mmedia in China have been strongly critical as the European Union and the United States have stepped up their criticisms of Chinese trade policies, most recently by making preparations to file with the World Trade Organization a challenge to Chinese tariffs on imported auto parts. "It is not an overstatement to claim that the country has become the world's largest victim of protectionism," the official China Daily newspaper said on Monday.

          With the approach of President Hu's visit, Chinese officials and media have been blaming American restrictions on the export of technology with potential military applications for their country's bilateral deficits with the United States.

          Karan K. Bhatia, a deputy United States trade representative who used to be the deputy under secretary of commerce responsible for administering the export control rules, denied in a telephone interview on Friday that the rules had a discernible effect on American exports to China.

          The value of contracts blocked by the rules is "in the millions of dollars, not even the tens of millions," he said, adding that, "This is as red a herring as they come."

          Chinese textile and apparel exports have captured the greatest attention over the last year, mainly because China agreed to special rules when it joined the World Trade Organization in 2001. Those rules have allowed the United States and the European Union to restrict their imports of Chinese goods even though quotas on other countries' shipments were lifted at the start of last year.

          But detailed Chinese trade data for the first two months of this year showed that Chinese exports were climbing briskly for a wide range of goods, with cellphones and television sets showing especially large percentage increases.

          Because of differences in recordkeeping, China calculates that its exports to the United States exceed imports by three to one, while the United States puts the ratio at six to one.

           
           

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