China's Trade Surplus Swells in Sept.


Associated Press
October 12, 2007 -

By JOE McDONALD

BEIJING - China's trade surplus soared to its fourth-highest monthly level on record in September amid strong demand for its exports, the government said Friday, adding to pressure on Beijing to take action on market barriers and loosening currency controls.

The $23.9 billion surplus, reported by the Commerce Ministry, was an increase of 56 percent over the September 2006 gap of $15.3 billion.

The Chinese government says it is not actively trying to inflate its trade surplus, but some American lawmakers are pressing for sanctions if Beijing fails to take faster action to ease currency controls that they say are fueling the trade gap.

September's figures put the cumulative surplus for the first nine months of the year at $185 billion, surpassing the $177.5 billion surplus reported for all of 2006.

Economists expect the trade surplus - the amount that exports exceed imports - to stay above $20 billion a month amid strong demand for China's low-cost goods despite a string of warnings and recalls abroad over faulty or tainted Chinese-made tires, toothpaste, fish and other products.

Critics of Beijing's trade record say controls on China's currency, the yuan, keep it undervalued and give Chinese exporters an unfair price advantage in foreign markets.

U.S. and other foreign companies also are complaining that China is obstructing access to its markets with new rules on investment, taxes and other issues that appear to favor Chinese competitors.

China's exports rose 22.8 percent in September to $112.5 billion, while imports were up 16 percent at $88.6 billion, according to Commerce Ministry figures. The country reported an all-time monthly high trade surplus of $26.9 billion in June.

Beijing has tried to restrain export growth by cutting rebates of value-added taxes for exporters and imposing new duties on steel, plastics and other goods that are considered too energy-intensive or polluting.

The United States reported a $232.5 billion trade deficit with China last year, its biggest ever with any country. The gap this year is on track to surpass that.

Beijing has let the yuan rise by more than 9 percent against the U.S. dollar since authorities revalued the currency in July 2005. A stronger yuan is expected to help reduce the surplus by making China's exports more expensive abroad, but critics say the yuan is still undervalued and they want faster action.

American lawmakers are calling for measures to penalize China for its currency controls, despite objections from Treasury Secretary Henry Paulson, who is conducting a long-range "strategic economic dialogue" with Beijing over trade and other disputes and says sanctions would disrupt discussions.

The flood of export revenues also is straining Beijing's ability to contain pressure for prices to rise. The central bank drains billions of dollars a month from the economy through bond sales and has piled up more than $1.3 trillion in foreign reserves.

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Chinese Commerce Ministry site (in Chinese): http://www.chinacustomsstat.com



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