Trade relations between China and the US will face a "serious setback" if the US "rashly" imposes tariffs on Chinese imports, China's Commerce Ministry Bo Xilai said.

"China is not pursuing a big trade surplus with the US," Bo said in a meeting with two US senators on March 23, according to a statement posted on the Ministry of Commerce website late last night. "China is willing to increase US imports to help trade develop evenly on both sides."

Chinese Commerce Minister Bo Xilai [newsphoto/file]

The US's trade deficit with China surged by a quarter to a record $201.6 billion last year, prompting American lawmakers to threaten punitive tariffs on Chinese imports. New York Senator Charles Schumer and Lindsey Graham, a Republican from South Carolina, were in China this week to decide whether to proceed to a vote on a bill which would apply 27.5 percent tariffs on Chinese imports. The senators accuse China of keeping the yuan artificially low to spur exports.

Bo said China acknowledges the trade deficit issue. Still, he said industry restructuring is to blame for the loss of manufacturing jobs in the U.S., not rising Chinese imports. He also asked for some existing trade restrictions to be lifted.

"China hopes the US would quickly scrap restrictions on exports of high-technology products to the nation as this would bring more trade opportunities for the US,"Bo said in the statement.

The US restricts companies from selling semiconductor- production equipment to China used to make more advanced 12-inch wafers.

Trade Summit

The US and China are planning to hold an April 11 trade summit in Washington, along with a visit to the US by Chinese President Hu Jintao. Schumer told reporters on March 23 his decision on sanctions would depend on Hu's meeting with President George W. Bush on April 20, and the Treasury Department's latest review of US trading partners' currency policies on April 15.

On July 21, China took the first step in a decade toward allowing a freely traded currency by letting the yuan, a denomination of China's currency, the renminbi, gain 2.1 percent against the dollar.

China has linked the yuan's value to a basket of foreign currencies, including the euro and yen. It allows the yuan to fluctuate by up to 0.3 percent either side of a daily rate against the dollar announced by the central bank.

The next stage of the country's monetary measures will be to "improve the foreign-exchange rate formation mechanism, enlarge the foreign-exchange market, add flexibility, while keeping basic stability at a reasonable and balanced level,"the People's Bank of China said yesterday.