WASHINGTON (AP) – The U.S. trade deficit set a record for a fifth straight year, and the imbalance with China soared to an all-time high as well.

The Bush administration pledged to keep pursuing its free-trade policies, while Democrats now controlling Congress demanded a change in course.

The gap between what the U.S. sells abroad and what it imports rose to a record $763.6 billion last year, up 6.5 percent from the previous record of $716.7 billion in 2005, the Commerce Department reported yesterday.

For December, the deficit jumped a bigger-than-expected 5.3 percent to $61.2 billion.

Bush administration officials said the wider deficits were primarily a factor of faster growth in the United States and warned against pursuing policies that would erect protectionist trade barriers in this country.

“Our focus is on growing our exports, growing our economy, reducing our unemployment and keeping inflation in check,” Commerce Secretary Carlos Gutierrez said in an interview from New Delhi, India.

Treasury Secretary Henry Paulson announced he was naming Alan F. Holmer, a pharmaceutical company executive and a former trade official during the Reagan administration, to be his deputy in charge of a new high-level strategic dialogue with China that he instituted in December.

Paulson said the next meetings would be May 23-24 in Washington and that he was in frequent contact with the head of the Chinese delegation, Vice Chairman Wu Yi, in an effort to achieve results to lessen trade tensions.

House Speaker Nancy Pelosi and 13 other top House Democrats sent Bush a letter saying the new trade figures underscored the urgency for a course change on trade.

“The consequences of these persistent and massive trade deficits include not only failed businesses, displaced workers, lower real wages and rising inequality, but also permanent devastation of our communities,” the Democrats said.

They noted that more than 3 million manufacturing jobs have been lost since Bush took office, with about one-third of those losses attributed to the rising deficit in manufactured goods.

The Democrats urged Bush to pursue more cases against unfair trade practices including a challenge before the World Trade Organization against currency practices of both China and Japan.

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