The latest trade numbers come as the United States struggles to repair strained economic relations with the rising Asian power, the world's second-largest economy and the number-two US trading partner.

President Barack Obama and his administration are expected to discuss trade issues with Hu on his state visit Wednesday, including a key irritant, China's yuan currency.

The United States complains that Beijing keeps the yuan artificially cheap to boost exports, and China appears on track to beat its 2008 record trade surplus with the US this year.

The Commerce Department reported the overall US trade deficit fell to $38.3 billion in November, its lowest level since January. Most analysts had expected it to rise to $41 billion.

The October trade deficit was revised lower, to $38.4 billion, from an initial estimate of $38.7 billion.

"The trade deficit is narrowing because exports are growing as imports hold steady," said Christopher Cornell at Moody's Analytics.

"However, this trend is unlikely to persist," he said. "A strengthening US recovery will eventually drive up import demand, reversing the current trend."

Joel Naroff of Naroff Economic Advisors said the report raises the question of how the Federal Reserve will react if fourth-quarter economic growth comes in substantially higher than expected.

"That could raise the decibel level on the debate over QE2," he said, referring to the Fed's controversial $600 billion asset purchases program, a second round of quantitative easing, unveiled in November to boost a flagging recovery.

Both US exports and imports of goods and services increased slightly, according to the Commerce Department.

US exports rose for the third consecutive month, by 0.8 percent to $159.6 billion, after a 3.0 percent increase in October.

Imports rose a weaker 0.6 percent, to $198 billion, following a decline in October.

The US trade deficit hit a 2010 monthly peak above $50 billion in June, but since then has trended downward, thanks to slowing imports, particularly oil, and solid demand for US goods, especially in emerging-market economies.

Obama has set a target of doubling US exports by 2015 to support the economy's struggle to recover from severe recession.

Over the first 11 months of 2010, the United States has been making progress toward that goal, with exports rising a solid 16.8 percent from the same period in 2009.

At $159.6 billion in November, exports were some four percent below their record level in July 2008. Imports remain nearly 15 percent below their levels in that summer.

The Commerce Department said the surplus in services, a US strength in foreign trade, rose to a record 12.9 billion dollars.

The US imported in November a relatively low volume of petroleum products, but surging oil prices pushed the petroleum products deficit up to 20.1 billion dollars.

By country, the US trade gap with Canada, its largest trading partner, widened 48 percent to $1.75 billion.

With the eurozone, the US deficit narrowed less than one percent to $5.5 billion.

But the politically sensitive deficit with China grew 0.5 percent to $25.6 billion, despite record US exports of $9.5 billion.

The huge China gap appeared set to top its 2008 record. It was $252.4 billion over the first 11 months of 2010, compared with $268.0 for all of 2008.

"Since imports from China have been roughly four times greater than exports to China over the past year, the trade deficit will continue to widen in the short term, and will not narrow unless exports to China grow faster or imports from China slow," Moody's Cornell said.

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