May 21 (Bloomberg) -- China will raise export taxes on 142 products and cut import tariffs on 209 types of goods to pare a record trade surplus that's threatening to hurt relations with the U.S. and other nations.

Starting June 1, China will charge higher export taxes on steel products, pig iron, nickel, lead and zinc, the Chinese finance ministry said today on its Web site. Import tariffs will be slashed for home appliances, kitchenware, softwood, coal and fuel oil to encourage domestic consumption, the ministry said.

Chinese Vice Premier Wu Yi is scheduled to meet U.S. Treasury Secretary Henry Paulson this week in Washington D.C. to discuss ways for paring last year's $232.5 billion of U.S. trade deficit with the world's most populous nation. The record trade gap is feeding complaints in Congress that China is artificially keeping its currency cheap to give exporters a leg up over American competitors.

``Today's move, combined with other tax adjustment China has announced since last September, should have its effect,'' said Sun Mingchun, Lehman Brothers Inc.'s economist in Hong Kong. ``It will help boost imports and consumption.''

China, the world's largest producer of steel, will impose as much as 10 percent export tariff on steel wires and rods, plates and some other products. The company will increase the export duties on steel slabs, ingots and pig iron to 15 percent from 10 percent, according to the statement.

The new taxes, the third set since last year, are ``aimed at reducing exports of energy-consuming, polluting and resource- intensive products,'' the finance ministry said.

Steel Tax Rebates

China has reduced tax rebates on steel shipments as it seeks to curb a trade surplus that may swell by 45 percent this year and to restrict expansion in production capacity. The government wants tougher measures to control steel exports as it has acknowledged measures taken so far may not be sufficient.

``The tax increase may help curb export of metals in the short term and damp domestic prices,'' said Huang Shoufeng, an analyst at Jinrui Futures Co. in Shanghai. ``The rise may erode steelmakers' earnings and weigh down their stock prices in the coming days.''

China's steel exports more than doubled in the first three months of 2007 to 14.1 million metric tons from a year earlier, according to data from the Beijing-based customs office.

Export taxes on nickel, chrome, tungsten, molybdenum and rare earth will be raised to 15 percent from the current 10 percent, while duties of steel alloys, zinc and graphite will be raised to between 10 percent and 15 percent, from the current range of 5 percent to 10 percent, the statement said.

Promoting Imports

The import taxes on home appliances, kitchenware, softwood, coal and fuel oil will be cut to between zero and 3 percent, the statement said.

China is increasing imports of energy products to supply the world's fastest-growing major economy. The nation became a net coal importer for the first time in January as power producers increased generation to meet demand.

``Coupled with the continued yuan appreciation, the growth in trade surplus this year should be lower than last year's,'' Lehman Brother's Sun said. China's 2007 trade surplus will grow by 33 percent from last year to $235 billion, he said.

China's central bank on May 18 increased the amount the yuan can appreciate, raised interest rates and curbed bank loans. The yuan will be allowed to move as much as 0.5 percent on either side of a rate set each morning on China's foreign-exchange market, from 0.3 percent, the central bank said last week.

Textile, Shoes

The U.S. Commerce Department in March levied import duties on China-made coated paper to compensate for Chinese subsidies to exporters. The move opened the way for steel companies, textile producers and other manufacturers facing competition from China to apply for the same protection.

That may prompt similar moves by China to raise export taxes on textiles and shoes, where friction with trade partners has been growing, said Lehman's Sun.

China's trade surplus swelled 63 percent in April from a year earlier to $16.9 billion. The trade surplus for the first four months of 2007 was $63.3 billion, an increase of 88 percent from a year earlier.

China's current account surplus, a measure of exports and imports of goods and services, widened 55 percent in 2006 from a year earlier to a record $249.9 billion, the country's currency regulator said on May 10.

To contact the reporter on this story: Xiao Yu in Beijing at yxiao@bloomberg.net; Zhang Dingmin in Beijing at Dzhang14@bloomberg.net

Last Updated: May 21, 2007 07:11 EDT