China to set up free trade zone on southern island of Hainan

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The main source of concern is the escalating tensions with China after Trump last month imposed steep tariffs on steel and aluminum imports, and then then hit Beijing with punitive duties in retaliation for massive theft of U.S. intellectual property.

Exports and imports both posted double-digit growth. That left China with a rare trade deficit for the month, also the first drop since last February.

The data follows weeks of tit-for-tat tariff threats by Washington and Beijing, sparked by USA frustration with China's massive bilateral trade surplus and intellectual property policies, which have fueled fears of a global trade war.

China's first-quarter exports to the United States rose 14.8 percent from a year earlier, despite a 5.6 percent drop in March.

The Yangtze river delta region, which comprises Jiangsu, Zhejiang and Anhui provinces and the city of Shanghai, saw PM2.5 levels fall 4 percent in March, but average levels rose 1.8 percent in the first quarter as a whole.

But a stronger currency could also be starting to erode Chinese exporters' competitiveness.

During the first quarter, the levels of PM2.5 in the Beijing-Tianjin-Hebei region, which has been under heavy political pressure to tackle pollution, dropped 22.1% to 74 micrograms per cubic metre, down from near-record highs in the same period of a year ago.

"Beijing is extending an olive branch and urging the resolve trade disputes through dialogue rather than tariffs", said economist Vishnu Varathan of Mizuho Bank in a report.

Concentrations of particulate matter of less than 2.5 microns, known as PM2.5, climbed to 80 micrograms per cubic metre in the region last month, an increase of 27 percent from a year ago, the ministry said.

In the first week of April, the USA announced tariffs worth $50 billion on Chinese products which, it said, was the result of Beijing forcing the American companies to transfer their technology to China's firms.

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Even as China's trade surplus narrowed overall in the first three months of the year, its surplus with the U.S. surged 19.4 percent to $58.25 billion from a year earlier, customs data showed on Friday. But the solid global growth outlook may provide some buffer.

Xi said in a speech to participating naval officers that the People's Liberation Army should persevere in the development of its marine forces, build modern systems of maritime combat and improve its capacity in diversified military missions.

"This year, under the guidance of the two leaders, China-India relations have been developing with a sound momentum".

During Trump's first year in office the surplus reached record highs - $375 billion by United States counting, or $276 billion according to Chinese data.

Imports of commodities continued to lead the way in March, with shipments of copper, crude oil, iron ore and soybeans all rising from the previous month.

Calculated with exchange rates of respective years, China's GDP accounted for 14.8 percent of the world economy in 2016, up from 12.5 percent in 2013.

The trade surplus with the United States contracted 13 per cent from a year earlier, while China's global trade balance swung to a $5 billion deficit.

China on Friday called on Washington to be patient about the unfavourable trade as tensions between the economic superpowers simmer.

China's tech sector, which is key part of Beijing's longer-term "Made in China 2025" strategy to move from cheap goods to higher-value manufacturing, may be particularly vulnerable.

Each side has slapped tariffs of $3 billion in goods so far, but the USA has threatened to impose duties on more products and China has vowed to retaliate.