Reuters
Wednesday, December 13, 2006

The politically sensitive trade deficit with China swelled to a record $24.4 billion in October, as imports from there surged to $29.3 billion, also a record.

The trade gap with China for the first 10 months of the year totaled $190.6 billion, keeping it on track to easily surpass last year's record of $202 billion.

"It looks as if our deficit with China will be about $240 billion this year, about a 15 percent increase," said Joel Naroff, president of Naroff Economic Advisors.

The galloping trade deficit with China is one of the main reasons for top-level meetings on Thursday and Friday in Beijing. U.S. Treasury Secretary Henry Paulson is leading a team of Bush administration cabinet officials and Federal Reserve Chairman Ben Bernanke for talks with senior Chinese officials on trade and economic concerns.

Paulson has warned against expecting quick results from the meeting, but many manufacturers who feel harmed by China's currency and trade policies are growing impatient.

"Today's figures should remind Secretary Paulson that major progress in fixing America's broken China trade policy is needed now," said Alan Tonelson, research fellow at the U.S. Business and Industry Council.

Overall U.S. exports increased a slight 0.2 percent in October to a record $123.6 billion, led by records in services, capital goods and consumer goods.

Exports have been aided by the dollar's decline, which has made U.S. products more competitive in world markets.