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US trade deficit climbs to record for the 4th year

Chinese imports, surging energy prices swell shortfall

WASHINGTON --The US trade deficit widened to a record for a fourth straight year in 2005 as Chinese imports poured in and energy prices jumped to their highest ever.

American companies imported $726 billion more goods and services than they exported last year, the Commerce Department said yesterday. The shortfall in December increased to $65.7 billion from $64.7 billion a month earlier.

Improvement in the trade deficit this year may prove difficult because the US economy is stronger than most of its trading partners, economists said. China accounted for more than one-quarter of the total US deficit last year, the most for any country, eliciting a chorus of criticism from lawmakers about the Asian nation's trade and currency policies.

''There is still significantly stronger growth in the US relative to the rest of the world," said John Shin, an economist at Lehman Brothers Holdings Inc. in New York. ''That's been the dominant factor in terms of continued large trade deficits and that's not going to change much this year."

Imports in December rose to a record $177.2 billion, boosted by overseas shipments of business equipment, industrial supplies, motor vehicles and consumer goods including electronics. Exports also increased, to a record $111.5 billion.

''We need to get the trade balance under control," US Trade Representative Rob Portman said in an interview from the White House yesterday. ''But it's also an indication of a healthy economy" in the United States.

The Treasury Department yesterday reported the first consecutive monthly budget surpluses in three years. The $21 billion surplus last month followed an $11 billion surplus in December.

Even as the strong economy boosts tax collections, the White House still forecasts a record $423 billion deficit this year. Mounting trade and budget deficits mean the United States will have to depend that much more on overseas investors to fund them.

The trade deficit last year was a record 5.8 percent of the economy, up from 1.3 percent a decade earlier.

The December deficit with China narrowed 11.9 percent to $16.3 billion from $18.5 billion the previous month. The gap with China last year was a record $202 billion, compared with $162 billion in 2004.

Berkshire Hathaway Inc. chairman Warren Buffett and George Soros, chairman of Soros Fund Management, are among investors predicting that a widening trade gap will weaken the dollar even after the US currency rallied last year. Bigger deficits mean more dollars need to be converted into other currencies to pay for imports.

The dollar recovered from an initial decline against the euro yesterday. It appreciated 14.4 percent against the 12-nation currency in 2005 and climbed 14.7 percent versus the yen.

Lawmakers claim that China keeps the value of its currency artificially low, giving it an unfair advantage by making Chinese goods cheaper abroad. Richard Shelby, an Alabama Republican and chairman of the Senate Banking Committee, said that Treasury Secretary John Snow should name China a currency manipulator.

Economists expected the December deficit to widen to $65 billion from the originally reported $64.2 billion in November, according to the median of 60 estimates in a Bloomberg News survey. The monthly deficit was the third-largest ever.

Imports of consumer goods in December rose by $1.8 billion, led by televisions, stereo equipment and pharmaceuticals. Overseas shipments of automobiles increased $498 million.

Imports of industrial supplies rose $138 million to $49 billion, reflecting more shipments of iron and steel, lumber and aluminum. Imports of petroleum declined as the average price and volume fell.

The record trade bill last year was owed in part to a surge in crude oil prices which were the highest ever.

US exports of capital goods, which include civilian aircraft, rose to $32.3 billion from $32.1 billion in November.

Exports of consumer goods rose to $10.6 billion from $9.9 billion, and exports of automobiles and parts increased by $403 million.

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