With Chinese President Hu Jintao’s highly publicized visit to the US occurring this week, expect China headlines to dominate the news.

President Obama is expected to take a tougher stance against China in regards to its military expansion, market access to US goods and services, the appreciation of the Chinese currency, and the country’s human rights record. Prior to the visit, an advisor to the People’s Bank of China, Li Daokui, made several comments that address US concerns. Li said that China’s trade surplus would account for 1 percent of GDP this year, compared to about 3.3 percent last year, as domestic demand would lead to higher imports. This means that China’s trade surplus would come in at more than USD60 billion, or about a third of last year’s USD183.1 billion. He also said that China would likely raise interest rates again in the first quarter in order to tamp down inflation.

China’s Premier Wen Jiabao said the country must clamp down on high levels of bank lending at the beginning of the year and that the country will use a cocktail of monetary policy tools to rein in the pace of lending in the country. Chinese banks typically front load their lending at the start of the year. Chinese policymakers have been concerned that runaway bank lending is contributing to inflation and rising asset bubbles in the country. Chinese banks made RMB7.95 trillion (USD1.20 trillion) in new loans last year, overshooting the government target of RMB7.5 trillion. Some analysts believe that China’s lending levels in the first week of January topped those seen in the full month of December, 2010. He also said the country will continue to curb speculation in the property markets and increase the supply of small- and midsized homes. Property prices in 70 of China’s large and midsized cities rose by 6.4 percent year on year in December, making housing prices too high for most Chinese citizens, according to data from the National Bureau of Statistics.

China’s exports of rare earth elements (REE), metals essential for the manufacture of a broad range of technologies, rose by 14.5 percent in the first 11 months of 2010, with most shipments going to Japan, Europe and the US. Exports rose to 35,000 tonnes, according to Commerce Ministry data, as prices more than doubled in the same time period. A ministry spokesman did not explain how REE exports exceeded the government 2010 quota of 30,300 tonnes. China, which controls about 95 percent of global REE supply, may slash its export quota by 35 percent in 2011, though a ministry spokesman said that the government was still deliberating on the full-year quota.