China's trade surplus zooms to record $27 bn in Oct

Source: Economic Times/India

13 Nov. 2007

HONG KONG: China’s trade surplus rose to a record $27.05 billion in October, adding fuel to US and European complaints the yuan is undervalued. The gap increased 13.5% from a year earlier, the customs bureau said on its website on Monday. The surplus trailed the $30.8 billion median estimate of 14 economists after imports surged 25.5%, exceeding export growth for the first time since March.

The yuan advanced 0.6% against the dollar last week, the biggest jump in two years, bringing the currency’s gain to 11.6% since the end of a fixed link in July 2005. US Treasury Secretary Henry Paulson and European Central Bank President Jean-Claude Trichet will visit Beijing within the next month to press for faster appreciation. “Paulson will continue to face pressure from the US Congress to persuade China to allow a freer exchange rate,” said Shuji Tonouchi, senior economist at Mitsubishi UFJ Securities in Tokyo.

The yuan closed 0.02% lower at 7.4123 against the dollar in Shanghai. Its gains this year contrast with the US currency’s 9.4% fall against six major currencies and record low last week versus the euro. Global oil and commodity prices contributed to China’s import surge, said Wang Qian, an economist at JPMorgan Chase in Hong Kong. Crude rose above $98 a barrel for the first time last week and has gained 57% this year. Imports jumped to $80.7 billion, while exports rose 22.3% to $107.7 billion.



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