China's Trade Surplus Jumps 74% To New Record

Surplus expected to slow in 2007 with new environmental regulations.

China's trade surplus last year soared 74% to hit a record $177.47 billion, state press said Jan. 10. The trade surplus for December alone was $21 billion, a slight fall from November's$ 22.9 billion.

The surplus has been a major concern for China's biggest trading partners, particularly the U.S., and today's numbers were expected to fuel calls for Beijing to take tougher action to reverse the trend. China's critics say the yuan is being kept drastically undervalued, giving Chinese exporters an unfair advantage by being able to sell their products in overseas markets more cheaply.

Sun Mingchun, chief economist with Lehman Brothers in Hong Kong, said that another rise in the surplus could be expected this year, although he said the increasing trend should begin to slow. Aside from a stronger yuan, Sun said the rise in the surplus would begin to slow in 2007 due to sharp increases in energy and resources costs, along with policies that will force companies to be kinder to the environment. "All that will increase the cost of the enterprises and will make companies export less," he said.

China's trade surplus with the U.S. stood at $116.2 billion in the first 10 months of 2006, up 25.2% over the same period of 2005. For their part Chinese officials insist that Washington is partly to blame due to U.S. restrictions on exports of high-tech and security-sensitive goods as well as Washington's failure to boost low U.S. savings rate.

Copyright Agence France-Presse, 2007

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