China's trade surplus will reach US$250-300 billion in 2007, driven by the country's strong external demand, the top economic planner said on Tuesday.

China's surplus hit a record US$177.5 billion in 2006. In the first four months of this year the surplus totaled US$63.3 billion, up 88 percent from a year earlier.

"The trade surplus is unlikely to shrink in the short term, and it may last for a long time during the industrialization process," the National Development and Reform Commission said in a statement on its website (www.ndrc.gov.cn).

The government has cut export tax rebates and raised export taxes for high-polluting and energy-intensive products in an effort to trim the trade surplus.

The commission said that neither a stronger yuan nor cuts in export tax rebates would result in a large shift of export orders away from China. "It's hard for importing nations to find replacements for Chinese manufacturers. It will be impossible in the foreseeable future to shift orders away from China on a large scale," it said.

The low cost of labor and resources such as land, power and water, together with deep-rooted incentives for export-driven economic growth, had kept Chinese manufacturers competitive in the international market, it said.

The strong global economy was also driving up demand for Chinese goods, the commission said. It said some factories in the export strongholds of the Pearl and Yangtze River deltas had been unable to fill all their orders in the first quarter.

While acknowledging challenges arising from the huge trade surplus such as excess liquidity, pollution, environmental damage and trade frictions, the commission said it would take time for China to strike a balance in its trade.

                                                                   (Reuters)