China's trade surplus continued to expand sharply in January, rising 46.7% year-on-year to $9.49 billion, official figures showed Feb. 13. The trade surplus in January was down from the $11 billion reported in December but was well up on the $6.49 billion posted in January 2005.
Imports for the month totaled $55.5 billion, up 25.4%, while exports rose 28.1% to $64.9 billion, the Ministry of Commerce reported. Total trade in January came to $120.49 billion, up 26.8% from the same month in 2005.
The figures follow the announcement last month that China's trade surplus for 2005 had more than tripled to a record $101.9 billion .The growing surplus has caused much friction with many of China's trade partners, most notably the U.S., who argues that Beijing keeps the yuan weak to gain an unfair trading advantage. Since last July when the yuan became linked with a basket of currencies, it has appreciated at a snail's pace, rising from the 8.11 rate set in the July changes to 8.0458 against the dollar on Feb. 13.
Against this background, Washington and Brussels have called for greater flexibility in China's forex regime to allow the yuan to appreciate much more and much faster than it has done to date. Beijing has insisted in turn that while it is committed to further reform of its currency system, changes have to be slow and orderly to avoid possible disruption, especially to its financial system.
Huang Yiping, a Hong Kong-based economist with Citigroup, said Feb. 13 trade numbers would give the U.S. and others fresh ammunition in their campaign for a stronger yuan.
"Certainly the large trade surplus implies further pressure for currency movement. We expect a five percent appreciation in the yuan this year," Huang said, putting the Chinese unit at about 7.80 to the dollar by year's end. Huang said China was taking steps to balance its trade numbers, especially with the U.S., but the surplus was still expected to remain about $100 billion for the full year.
In further efforts to reduce the trade imbalance, China could go on a buying spree of U.S. products early this year ahead of a visit by President Hu Jintao to the U.S. in April, Huang said.
Copyright Agence France-Presse, 2006