China will encourage imports and restrict exports this year in a bid to balance trade and ease the concerns of trading partners.

"Cutting the huge trade surplus is the priority task for 2007," Commerce Minister Bo Xilai said yesterday.

He made the remarks as China's trade surplus widened to a record $177.5 billion in 2006, 74 percent higher than the $101.88 billion in 2005.

If it grows at the same rate this year, the trade surplus will mount to $300 billion, which is "likely to transform an economic problem into a political one".

"The yawning surplus with the United States and the European Union has strained China's foreign trade environment, triggering more frequent trade friction," he said.

Bo said an overly-large trade surplus is not good for China's sustained economic growth; therefore, the government will "decisively" reduce exports of high-energy-consuming and low-value-added products to restructure the sector.