China pledges to take more imports

China’s leaders pledged to cut its soaring trade surplus in an economic plan for 2007 issued ahead of a visit next week by US Treasury Secretary Henry Paulson for talks on commerce and other contentious issues.

The plan, reported today by Chinese state media, calls for boosting imports, with an aim to bring them in line with booming exports, and encouraging domestic consumption.

It was issued after a three-day meeting this week led by president Hu Jintao and premier Wen Jiabao.

“Chinese leaders pledged to redouble efforts to vigorously expand imports and overseas investment,” the Xinhua News Agency said. It said they called for making “balancing international payments a major goal for next year”.

Mr Paulson and Chinese leaders are due to hold talks next week in Beijing as part of a wide-ranging “strategic dialogue” on trade and other issues.

Washington’s expert on economic relations with Beijing is under pressure from American companies to take a hardline with Beijing on currency policies and greater market access for foreign competitors.

The Chinese economic plan calls for maintaining controls imposed to cool off a boom in construction and bank lending that leaders worry could ignite a financial crisis, according to Xinhua and state newspapers.

China’s economy expanded by 10.7% in the first nine months of this year. Communist leaders want to continue fast growth to ease poverty but are trying to restrain industries such as property and land, auto manufacturing and textiles where they worry that spending on unneeded factories and other assets could fuel inflation or a debt crisis.

The plan reflects the Communist Party’s long-term goal of shifting the basis of China’s economic growth from exports and investment to spending by its own consumers.

The plan was issued by the central economic work conference, a body created by the party in an effort to manage an economy being drastically remade by capitalist-style reforms.

Today’s reports didn’t say whether the plan sets an economic growth target. Earlier reports cited a party researcher who said planners called for growth to slow, setting a target of 8% next year, down from the 10.7% rate for the first nine months of this year.

The government said this week it expects China’s global trade surplus to hit a record €126m this year.

The US and other trading partners are pressing Beijing to raise the state-controlled value of its currency in order to encourage imports and to ease market access for foreign companies.

The flood of export revenues has strained Beijing’s ability to restrain inflation pressures. The central bank has been forced to buy up tens of billions of dollars in foreign currency every month in order to control the growth of the money supply.

Delegates at the planning conference recommended that China import more advanced technologies, management and foreign expertise, according to news reports.

They called for boosting consumption by creating more jobs for the rural and urban poor in order to raise incomes.

The delegates also called on Chinese companies to invest more abroad – another long-term party goal.

Chinese companies invested £6.3bn overseas last year, accounting for just 0.59% of global foreign investment, according to Xinhua.

Government figures show that domestic consumption accounted for 51.1% of China’s economic output in the first nine months of this year, down from 62%in the 1980s, the agency said.

The decline in the public consumption share of output was even sharper, falling from 48.8% in 1991 to 38.2% this year, the agency said.