Figures for 2006 are not yet available but processing trade totaled $831.88 billion last year, account for nearly half of the total trade volume.

Zhao said it is right to control companies in the processing trade that produce low value-added products using high energy consumption, but the government must be cautious with restrictions on labor-intensive industries in the processing trade.

"It (controls on labor-intensive processing trade) could affect the employment of a large population," she said.

In fact, the central government has acknowledged the risks and in Bo's blueprint, he expects the transfer of the processing trade from costal provinces to central and western China to cash in on the labor resources.

However, economists insist that it will take at least two years to achieve a balanced trade.

Economist Fan Gang predicted China's exports would continue to outstrip imports this year, which means the trade surplus is likely to increase but growth will slow down.

Mei of the commerce ministry research institute, however, warned trade partners must be "patient" during the process to cut the trade surplus.

                                                                        (China Daily 01/26/2007 page12)

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