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China will redouble efforts to trim its trade surplus by encouraging the import of strategic resources and high-technology products while restricting exports of energy-intensive goods, government officials said on Saturday.
Their comments follow a pledge by Commerce Minister Bo Xilai on Monday that cutting the surplus, which rose 74 percent last year to $177.47 billion, would be a priority for China in 2007. Assistant Commerce Minister Fu Ziying told a trade conference that China would reduce tariffs and streamline procedures for imports of high-tech and energy products.
Another goal would be to establish strategic reserves of important energy products, Fu said without elaborating. China is already building a reserve of crude oil that could grow to 100 million barrels by 2008.
"Apart from its direct impact, excessively rapid growth in the trade surplus increased China's foreign exchange reserves, money supply and liquidity. It also hindered the stable and healthy growth of the economy," he said.
Fu said China, to move up the value chain, would encourage exporters to innovate and prod domestic firms to undertake more outsourcing services for multinational companies.
Liang Xiang, assistant governor of the Export-Import Bank, said China was studying the option of subsidised loans for the import of strategic resources and key equipment, again with an eye to bringing China's external payments into better balance. She told the forum her bank had already lent about 10 billion yuan under a trial programme launched last year to finance such strategic imports. As a corollary, Liang said Ex-Im Bank would cut back lending to companies that export run-of-the-mill machinery, one of the biggest contributors to the growth in China's exports.

Copyright Reuters, 2007

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