China will strive to reduce its "excessively large" trade surplus to ensure sustained development of both the domestic economy and foreign trade this year, according to Chinese officials. In 2006, China recorded a sizzling economic growth of just under 11 per cent, largely powered by strong exports that rose by 27 percent to 969 billion U.S. dollars. The soaring exports expanded China's trade surplus to a record 178 billion dollars, up 74 per cent from the previous record of 102 billion dollars set in 2005.

Solutions

By calculating all of the gains and losses, the Chinese government is keen to reduce its soaring trade surplus.

According to Bo Xilai, "This is an opportunity for China to upgrade its lower value-added processing trade, optimize export structure and urge companies to shoulder their social responsibilities."

To reduce the hefty trade imbalance, China has used a package of industrial and taxation policies in recent years to rein in the export of products whose manufacture is highly energy consuming or highly polluting, and to simultaneously support the export of high value-added products and products with Chinese trademarks, upgrade the processing trade and expand the export of service and agricultural products.

With regards to imports, China has bolstered its imports of energy, raw materials, advanced technologies and equipment, and key spare parts and accessories.

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