TRADE GULF WIDENS; CHINA GAP HITS NEW HIGH.

Byline: Martin Crutsinger Associated Press 

America's monthly trade deficit ballooned to $10.4 billion as imports of toys and Christmas decorations pushed the gap with China to an all-time high just before the U.S.-Chinese summit.

The widening deficit in August reported Tuesday was the worst showing in seven months and came at an inopportune time for President Clinton, who is trying to sell a reluctant Congress on the virtues of free trade while also preparing for the state visit next week of Chinese President Jiang Zemin.

The administration hopes the summit will showcase closer ties between the two countries.

The U.S. appetite for imports from all countries hit a new record in August. On the export side, sales of commercial jetliners, normally a bright spot in the trade picture, fell by $888 million from July.

While emphasizing progress with China on a number of issues, Commerce Secretary William Daley said China's continued refusal to open its huge market to more American goods remains a major concern and will be a key topic during the summit.

``Our exports (to China) just aren't growing at the rate they should,'' Daley told reporters at a briefing on the trade figures. ``That will not continue without there being a political reaction - and we've tried to stress this repeatedly.''

Trade won't be the only sour note at next week's summit. Other points of potential conflict include human rights abuses in China, continued U.S. support of Taiwan and the continuing congressional investigations into Asian campaign donors.

Trade experts said that even if American companies manage to land a few contracts next week, it will do little to narrow the huge gap between what China sells here and what U.S. firms can sell in China.

For August, Chinese shipments to the United States hit a record $5.9 billion, led by a $253 million surge in shipments of toys and Christmas decorations. Half the toys sold in America come from China.

U.S. exports to China slumped to $898 million as sales of commercial airplanes, America's biggest export to China, suffered a decline.

For the first eight months of 1997, the total trade deficit is running at an annual rate of $114.5 billion, even worse than the eight-year high of $111 billion in 1996.

Clinton met with congressional leaders Tuesday in his continued efforts to lobby for the ``fast track'' authority he needs to negotiate new free-trade agreements.

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Chart

Chart: (Color) U.S. trade deficit

U.S. exports minus imports, in billions, seasonally adjusted 

Knight-Ridder Tribune Graphics Network