Chinese Foreign Minister Li Zhaoxing on Tuesday urged the United States to lift restrictions on exports to China in an effort to narrow its trade gap with the Asian country.

In a speech delivered at a luncheon hosted by the US-China Business Council, Li said the characteristic mutual complementarity and mutual benefit of trade and commerce between China and the United States have become more pronounced with economic globalization acquiring such a depth.

China is now the fourth largest trading partner of the United States, and is likely to become the third by the end of this year, according to the foreign minister. "It's truly exciting to see the prospects of China and the United States becoming each other's largest trading partner in the new century," he said.

With respect to trade deficit, Li said, the United States had had a trade surplus with China for 21 straight years beginning in 1972, and China only started to have surplus in 1993.

Most Chinese exports to the United States are labor-intensive goods that the United States has stopped producing for long. The goods are affordable and of good quality, which not only benefits average American customers but also helps US industrial restructuring and upgrading, he said.

Furthermore, more than half of the Chinese exports to the United States are produced by foreign-funded enterprises in China, mostly US companies.

"China surely hopes to buy more from the Untied States, but that needs US help. For example, the United States should lift its restrictions on exports to China," he added.

Last year, two-way trade between the two countries stood at 97. 18 billion US dollars, and the first half of this year saw the figure rising 34.4 percent to 56.4 billion dollars on a year-on- year basis, with US exports to China increasing by 36.1 percent.

*** Stable yuan facilitates trade

A basic stability of the exchange rate of the Chinese currency, the RMB, facilitates trade and commerce between China and the United States, Li said.

China adopts a regulated, singular, floating exchange rate regime based on market supply and demand, which is consistent with China's realities.

Li said China will go on improving its exchange rate formation mechanism while deepening its financial reform in the light of its development level, economic performance and international payment.

China must maintain basic stability of the RMB exchange rate which serves the economic stability in Asia-Pacific and the world at large, and the stability of the financial environment for the flow of China-US trade and commerce, the Chinese foreign minister said.

Since the volume of China-US trade accounts for only 1 percent of the US gross domestic product (GDP), exchange rate fluctuations of the Chinese yuan will not have a significant impact on the US economy, Li said.

*** Li meets Rumsfeld

Li exchanged views with US Defense Secretary Donald Rumsfeld on Sino-US relations and on military exchanges between the two countries.

Li said the two countries have achieved new progress in cooperation with economy and trade as well as in anti-terrorism, and have had fruitful consultations on major international and regional issues.

The Chinese side is pleased with the increasing exchanges between the armies of the two countries, and is willing, on an equal and mutually beneficial footing, to tackle differences and enhance exchanges and cooperation with the US side in various fields, the Chinese foreign minister said.

Rumsfeld said he is looking forward to the forthcoming visit by Chinese Defense Minister Cao Gangchuan to the United States next month.

He said the US Defense Department is willing to make efforts to promote the stable and healthy development of Sino-US relations.

The Chinese foreign minister on Tuesday also met US congressional leaders and leaders of the Senate Foreign Relations Committee and the House International Relations Committee on Sino- US trade and economic relations, the nuclear issue on the Korean Peninsula and other issues. China and the United States, which shoulder responsibilities in maintaining peace, stability and development in the Asia-Pacific region as well as across the world and share wide-ranging common interests, should respect each other and enhance cooperation, the Chinese foreign minister said.

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