China Vows Action as Trade Gap Swells

BEIJING, March 12 -- China reported a trade surplus in February of $23.76 billion, a ninefold surge from the same period a year earlier and one of the highest monthly totals ever. It came as top government officials reaffirmed promises to take measures to reduce the widening gap.

The U.S. government for years has been concerned that artificial controls on the Chinese currency, the yuan, make Chinese exports to the United States cheaper while making U.S. exports to China more expensive.

China has resisted U.S. pressure to let the yuan fluctuate more, saying if it is done too fast it may complicate China's ongoing transition to a market economy. But Wednesday, just days after U.S. Treasury Secretary Henry M. Paulson Jr. came to China to press financial-market reforms, Chinese officials echoed some of his sentiments.

Zhou Xiaochuan, the central bank governor, said at a briefing that China was working toward a market-oriented financial system and would gradually increase the flexibility of the yuan, although he offered no details or timetable.

Commerce Minister Bo Xilai said last week that "China's goal is not to seek a large trade surplus, but to achieve balance with its trading partners."

Kai Jiang, chief investment officer of the China Fund, a $100 million hedge fund, said he thinks Zhou's comments do not indicate a major change in China's view on allowing the yuan's value to float freely, but "certainly, it's positive that they're taking bigger baby steps."

Bo's comments, however, included a warning. "We have to face the truth that trade can be affected by many factors, which cannot be adjusted separately or as quickly as we expect," he said. He cautioned that measures such as proposed U.S. tariffs on Chinese goods would "ruin the development of Sino-U.S. trades and will demolish the win-win situation between the two countries' merchants."

Researcher Catharine Matacic contributed to this report.