China's trade surplus narrowed to the lowest since July 2004 as imports grew at the fastest pace in 15 months and exports cooled.

The surplus fell to US$2.45 billion from US$9.49 billion in January, the customs bureau said today on its Web site. That was below the median US$7.5 billion forecast in a Bloomberg News survey of economists. Imports jumped 30 percent as higher oil prices boosted the value of overseas purchases.

China is seeking to reduce last year's record US$102 billion trade surplus to avoid possible punitive tariffs on shipments to the U.S., where politicians and manufacturers blame an artificially weak Chinese currency for giving the nation's exporters an unfair advantage.

"The pressure will still be on China to make more movement on the currency side," said Tai Hui, an economist at Standard Chartered Bank in Hong Kong who forecast a US$2.5 billion February surplus. "The wheels are in motion in terms of U.S. politics."

Exports rose 22 percent after jumping 28 percent in January. Sales may have slowed because some businesses rushed to fill orders ahead of the Lunar New Year holiday, which fell in January this year and in February in 2005, Hui said.

Today's release didn't provide a breakdown of imports by product categories.

The U.S. trade deficit widened to a record US$68 billion in January as economic growth encouraged consumers to buy more Chinese-made goods. The nation's gap with China swelled 9.9 percent to US$17.9 billion, the Commerce Department said on March 10.

Reducing the Surplus

The U.S.'s record US$202 billion deficit with China in 2005 brought criticism from U.S. lawmakers and manufacturers, who say China's currency policies give it an unfair advantage. By not allowing for larger fluctuations of its currency Chinese-made goods are cheaper than they would otherwise be, they say.

China's trade surplus with the U.S. was US$7.7 billion for the first two months combined, the customs bureau said today. Exports to the U.S. jumped 27 percent while imports from the U.S. gained 19 percent, the bureau said.

China on July 21 revalued the yuan at 8.11 per dollar, 2.1 percent stronger than the pegged level it had been held at since 1995, and started managing it against a group of currencies including the dollar, euro and yen. The yuan has risen 0.8 percent against the dollar since then.

Not Enough

The gain hasn't been enough to satisfy many U.S. lawmakers. Senators Lindsey Graham and Charles Schumer have sponsored legislation that would slap tariffs of 27.5 percent on all Chinese imports unless the yuan is allowed to gain more rapidly.

China's President Hu Jintao and other government officials said last year the nation, the world's third-largest exporter, will take measures to reduce the surplus. Premier Wen Jiabao reiterated the pledge on March 5, saying the government will "correct the imbalance between imports and exports" by raising incomes to spur demand for foreign goods and by encouraging purchases of technology.

"Imports have picked up sharply over the past few months and that trend will continue because of the strength of the domestic economy and higher energy prices which boost the value of imports," said David Cohen, an economist at Action Economics in Singapore.

Part of the reason for the widening surplus with the U.S., which China puts at US$114 billion for 2005, is U.S. reluctance to allow technology exports to China, Foreign Minister Li Zhaoxing told reporters on March 7 in Beijing.

Who's to Blame?

"Besides Boeing airplanes, the U.S. is only willing to sell soybeans, cotton, California wine and Florida oranges to China," Li said. "Those things that are worth more, they won't sell, saying they contain high technology or are even for military use."

China Aviation Supplies Import & Export Group, which buys planes for the nation's airlines, signed an agreement on Nov. 20 for 70 Boeing 737-700 and 737-800 planes valued at about US$4 billion. The planes will be delivered between 2006 and 2008.

China, the world's third largest exporter, saw overseas sales climb by an average 32 percent annually over the past three years, six times faster than overall world exports. Growth was driven by foreign companies who built factories there to take advantage of low labor costs and the currency's peg to the dollar. They now account for more than half the nation's total exports.

Oil Import Bill

Oil imports are likely to pick up this year after growing 3.4 percent last year even as the economy expanded at triple that pace. Oil imports soared 69 percent in January from a year earlier to a record 13 million metric tons as oil companies rebuilt inventories.

Government price controls deterred refiners including China Petroleum & Chemical Corp. from buying more expensive crude oil on international markets, leading to fuel shortages in some parts of the country. Some analysts expect the government to allow refiners greater freedom to increase prices this year.

China, the second-largest oil consumer after the U.S., will begin storing strategic oil reserves at the end of this year, after finishing the first of four government storage facilities, Ma Kai, chairman of the National Development and Reform Commission, told reporters on March 6.