This year the contribution from investment and consumption to China's overall growth will drop further but the role of exports "remains at a very high level," People's Bank of China head Zhou Xiaochuan told Caijing magazine.

"On the whole, it looks like trade frictions will continue to worsen," he said in an interview with the respected financial news publication.

China's trade surplus for the first eight months of the year already stands at 60.22 billion dollars -- triple the annual average in 2000-2004.

The country recorded a trade surplus of 32 billion dollars last year, which opened it to a barrage of US criticism that it keeps its currency, the yuan, undervalued to give it an unfair trade advantage.

Zhou said he expected China's 2005 trade surplus will "markedly surpass the previous year's."

China has been locked in a number of major trade disputes this year, especially in the textile sector with the United States and the European Union.

On Wednesday, the US government accepted an industry request to consider quotas on another 13 types of textile imports from China.

Zhou said that accordingly China needs to stimulate domestic demand to help offset the big trade surplus and reduce trade frictions.

"Weak domestic consumption will further enlarge China's trade surplus, which is what we are unwilling to see," Zhou told the magazine.

"Stimulating domestic consumption is a basic part of China's development strategy; therefore some structural policies encouraging consumption should be key parts of the policy portfolio," Zhou said.

He added that the 2.1 percent revaluation of the Chinese currency against the dollar in July could achieve its objective although he added that it was necessary to periodically assess what level is appropriate for the yuan.

The manner of determining a "reasonable and balanced level" for the yuan needs to be "researched, understood and resolved as soon as possible," Zhou said.

China's full year trade surplus is expected to hit more than 80 billion dollars, according to previous state media reports.

All rights reserved. � 2005 Agence France-Presse. Sections of the information displayed on this page (dispatches, photographs, logos) are protected by intellectual property rights owned by Agence France-Presse. As a consequence, you may not copy, reproduce, modify, transmit, publish, display or in any way commercially exploit any of the content of this section without the prior written consent of Agence France-Presse.

Related Links
SinoDaily
Search SinoDaily
Subscribe To SinoDaily Express