Chinaââ¬â¢s trade surplus makes new record
BEIJING: Chinaââ¬â¢s trade surplus last year soared 74 per cent to hit a record $177.47 billion, state press said on Wednesday, as analysts warned of another rise in 2007 that would further anger the United States.
Citing the customs bureau, the Xinhua news agency said the trade surplus for December alone was $21 billion, a slight fall from Novemberââ¬â¢s $22.9 billion.
Chinaââ¬â¢s trade surplus jumped 74.1 per cent last year from the then record of $101.9 billion in 2005, and sky-rocketed more than five-fold from $31.98 billion in 2004.
The surplus has been a major concern for Chinaââ¬â¢s biggest trading partners, particularly the United States, and Wednesdayââ¬â¢s numbers were expected to fuel calls for Beijing to take tougher action to reverse the trend.
Chinaââ¬â¢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.
Song Guoqing, an economics professor at Beijing University, said he expected the surplus to climb sharply again this year, bringing more howls of protest from the United States.
ââ¬ÅI think the figure will be $250 billion in 2007... the pressure from the US will always be there as long as the surplus is huge,ââ¬Â Song said.
Sun Mingchun, chief economist with Lehman Brothers in Hong Kong, agreed that another rise in the surplus could be expected this year, although he said the increasing trend should begin to slow.
ââ¬ÅFor 2007, the surplus will continue to increase but it wonââ¬â¢t be as much as this year,ââ¬Â Sun said.
ââ¬ÅThe Chinese government is doing a lot of effort to slow it down. For one it is allowing the yuan to appreciate,ââ¬Â Sun said.
The yuan, which is managed against an undisclosed basket of currencies and is allowed to move 0.3 per cent each day, has appreciated at a slightly faster pace in recent months.
The yuan gained 3.2 per cent against the dollar last year and Sun predicted another rise of 4.0 per cent in 2007, however critics in Washington say the yuan is undervalued by as much as 30 per cent.
Chinaââ¬â¢s trade surplus with the United States stood at 116.2 billion in the first 10 months of 2006, up 25.2 per cent over the same period of 2005, according to previously released Chinese government figures.
For their part Chinese officials insist that Washington is partly to blame due to US restrictions on exports of high-tech and security-sensitive goods as well as Washingtonââ¬â¢s failure to boost low US savings rate.
But US trade is only part of the story. While the yuan gained slightly against the US dollar last year, it fell more than seven per cent against the euro.
Brussels and Beijing have butted heads on specific Chinese exports such as ultra-cheap bras and shoes.
In 2006, Chinese exports rose 27.2 per cent from the previous year to $969.08 billion, while imports increased 20 per cent to $791.61 billion, according to Xinhua.
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.
ââ¬ÅAll that will increase the cost of the enterprises and will make companies export less,ââ¬Â he said.
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