China's trade surplus may hit US$130b

China's trade surplus may hit a new high of between 120 billion and 130 billion U.S. dollars in 2006, Bi Jingquan, the deputy head of the National Development and Reform Commission (NDRC) has estimated.

Bi was quoted by Monday's China Securities Journal as saying the huge trade surplus is a direct result of the fiscal and tax policies.

China's trade surplus may hit a new high of between 120 billion and 130 billion U.S. dollars in 2006, Bi Jingquan, the deputy head of the National Development and Reform Commission (NDRC) has estimated.
An export port in Ningbo, East China's Zhejiang Province is seen in this photo taken on June 18, 2006. [newsphoto]

China should improve its policies concerning tax rebates for exports and processing trade, Bi said at an international symposium on the reform of China's public fiscal policy held in Beijing at the weekend.

According to figures from the General Administration of Customs, China had a record trade surplus of 101.8 billion dollars in 2005, the twelfth consecutive year in which China posted a trade surplus.

The huge trade surplus has led to increased trade disputes between China and its main trade partners and vociferous calls for the appreciation of the Chinese yuan.

A new surplus high in 2006 will bring even greater challenges to the exchange rate of the yuan, the report said.

China economy to grow 10% in 2006

China's economy will grow by 10.3 percent in the first half of 2006, then slow marginally for a full-year expansion of 10 percent, the central bank said in a new report.

At the same time, inflation will climb slowly, registering 1.3 percent in the first six months of the year and 1.7 percent for the 12 months, according to the report, from the People's Bank of China's research bureau.

The forecasts, released over the weekend and published in the Beijing Morning Post on Monday, come despite a stream of government measures aimed at slowing the economy, following growth of 10.3 percent in the first quarter.

China's economy has showed few signs of responding to the cooling measures, such as an interest rate hike in April and policies targeted at curbing investment in the property sector.

China is the world's fastest growing major economy, with expansion fueled mainly by investment and exports. It grew 9.9 percent in 2005.