However, to get around such restrictions, many Chinese businesses found a new strategy. They began processing materials slightly, but not completely, for export. Thus the bulk of Chinese exports moved from resource-intensive products to preliminary processed products and semi-finished products. For instance, China's exports of semi-finished aluminum products surged 57 percent year on year to more than 400,000 tons in the first five months of 2006, according to Chinese Customs statistics.

The importance of imports

Increasing imports is, to some experts, the best way to cut China's widening trade surplus because in their view, import growth drives economic growth.

China has mapped out a plan to boost its imports to reduce its huge trade surplus. The new measures include increasing imports of large machinery components, advanced technology and resource-intensive goods. This signals a strategic transformation for China to embrace a larger influx of foreign goods and capital. "China will further reduce import tariffs on energy, raw materials and advanced technology in a bid to ease the country's growing trade surplus," said Fu.

"China is expected to import more technology and key equipment from developed trading partners, such as the United States," said Zhao Yumin, an expert at the Research Institute of the Ministry of Commerce. According to her, China enjoys not only comparative advantages in labor-intensive manufacturing but also a high standard in machinery manufacturing.

Meanwhile, Zhao predicted that China would import more agricultural products in the long run because Chinese farmers are bearing increasing costs.

"Besides the zero-tariff treatment under the framework of the China-ASEAN Free Trade Agreement, China has also given zero-tariff treatment to 190 export items from the 28 least developed countries in Africa," Mei Xinyu, a trade researcher with the Chinese Academy of International Trade and Economic Cooperation affiliated to MOFCOM, told Beijing Review when talking about China's measures to enlarge imports.

Besides, China is planning to strengthen financial support for imports through the granting of import loans, a spokesman of MOFCOM said. The Export-Import Bank of China (EXIM) will encourage Chinese companies to expand imports, said Liang Xiang, Assistant President of EXIM. "We have provided loans to importers since 2006 so as to narrow the trade surplus. The government may offer loans with lower interest rates in the future to expand imports," Liang added.