China rejects US pressure over its soaring trade surplus

China's commerce minister on Monday rejected U.S. pressure over its soaring trade surplus, criticizing proposed punitive tariffs as a violation of free trade that would hurt American companies.

Photo: China rejects US pressure over its soaring trade surplus

Beijing is taking steps that will lead to a more balanced trade relationship, but results will take time, Commerce Minister Bo Xilai said at a news conference.

U.S. lawmakers who blame low-priced Chinese imports for the loss of American manufacturing jobs are pushing for a 27.5 percent increase in tariffs on Chinese goods unless Beijing eases currency controls that they say give its exporters an unfair advantage.

"That would be disastrous for companies from both sides, including the United States, who have benefited from our trading relations," Bo said. "If it were imposed, that would be not only trade protectionism but also trade hegemony."

The United States reported a record US$232.5 billion (EUR 176.6 billion) trade deficit with China last year, the AP said.

The White House has filed World Trade Organization complaint accusing China of violating commitments to the WTO by providing unfair subsidies to Chinese companies.

Bo said a large share of the U.S. deficit was from goods made in China by U.S.-financed companies and then sold in the United States.

"The Chinese government never intends to pursue a large trade surplus. We want to have a rough equilibrium in trade," Bo said.

The minister said China has taken steps that will change its trade balance but it is unrealistic to expect "tangible results" immediately.

Critics say China's currency, the yuan, is intentionally kept undervalued, giving exporters an unfair price advantage and adding to the country's surpluses. Some economists say a change in the exchange rate by itself is unlikely to close the trade gap signficantly.