THE United States' trade deficit with China is set for a US$50 billion blowout within the next 15 months, says a top US trade official. Lee Sands, a key negotiator in the recent copyright talks with China, yesterday said the looming imbalance would eclipse the Japanese deficit as the major trade problem confronting Washington. His comments came 24 hours after business leaders warned of a highly sophisticated mainland operation flooding Hong Kong and the region with pirated software. 'It is possible that the deficit with China will be larger than that with Japan, which is going to create some very serious political questions in the US,' Mr Sands said. China this year will export $40 billion to the US and receive $10 billion of direct investment from American business. Mr Sands said: 'Our side of the bilateral relationship is not so rosy. US exports rose only six per cent last year despite the competitive strengths of our industry. Our exports to China were $9.3 billion out of a total of $480 billion.' He said the trade deficit would swell from about $30 billion last year to an estimated $50 billion by the end of next year. 'Our trade deficit with Japan has been decreasing month by month, year by year, while our trade deficit with China accelerates. Right now it is growing at a 25 to 30 per cent clip. Multiple overlapping barriers to trade is one of the most significant barriers. 'Despite China moving away from a centrally planned economy to a quasi-market economy, China remains one of the most protected regimes in the world. 'The absence of fundamental international standards or a right of domestic or foreign firms to trade truly holds back the US side of the bilateral relationship.' Mr Sands, who was speaking at an American Chamber of Commerce breakfast meeting, said the approach of US trade policy had been 'fundamental, clear and consistent'. 'Our companies do best in an environment where there is written, clear and enforced rules and regulations; where the laws are transparent and rules of the road are known to all,' he said. 'Our companies do not do well where it is based on personal relationships, introductions between government officials and business or other factors.' He said the Sino-American relationship was driven by mutual commercial interest. 'Trade is the not only the vital part of our strategic relationship, it is also the most stable and vital part of our bilateral relationship,' Mr Sands said. The primary goal was to open China's market, particularly in service sectors such as telecommunications and insurance, and create an enduring framework for their relations. Mr Sands has met Attorney-General Jeremy Mathews in Hong Kong to express Washington's displeasure at the alleged failure of the courts to deter recording and computer software piracy. He plans to fly to Beijing next week for talks to push authorities to step up their enforcement of rogue compact disc (CD) factories, many of which are still producing pirated goods despite a major agreement signed with the US earlier this year. Meanwhile, a senior trade official said China's authorities must beef up their fight against copyright piracy to include distributors and manufacturers. He said: 'Where the Chinese have done a decent job, I think is reducing piracy at the retail level. What hasn't worked is that the special enforcement period has not been particularly successful beyond the retail sector. The Chinese do not appear to have gone after, with any seriousness, distributors and manufacturers.' The US has signed two major agreements on intellectual property rights in the past three years. This year Chinese authorities agreed to sweeping changes to their methods of enforcing infringements. The official yesterday criticised the lack of action against producers. 'The most blatant and obvious problem, and one we are going to focus the most attention on in the short term, is the continued existence of pirated CD factories,' he said.