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China’s trade surplus scorches into record territory

BEIJING - China’s trade surplus this year has already scorched past the record 12-month figure of 2006, official data showed Friday, giving further ammunition to critics of the Asian giant’s currency policies.

The accumulated surplus from January to September was 185.7 billion dollars, the customs bureau said, exceeding the 177.5 billion dollars for all of last year.

After three record monthly trade surplus figures in June, July and August, September’s 23.9-billion-dollar surplus was the fourth-largest ever, the customs figures showed. It was also up 56 percent from a year earlier.

“There will definitely be pressure on the currency to rise in value,” said Chen Jijun, a Beijing-based economist with Citic Securities.

The United States and other foreign critics argue China’s currency, the yuan, is kept artificially low to make Chinese exporters more competitive.

China de-linked the yuan from the US dollar in 2005 and has since allowed it to rise about 10 percent against the greenback, a pace many in the United States consider far too slow.

“We think they need to move considerably more quickly to a point of valuing their currency based on underlying market fundamentals,” deputy US Treasury Secretary Robert Kimmitt told journalists in Brussels Friday.

Some in the US Congress have called for sanctions to punish China over its currency policies, but Bush administration officials have opted for negotiations and occasional complaints at the World Trade Organisation.

On Thursday, Washington filed its fourth WTO complaint against China, challenging Beijing’s restrictions on imports of products of copyright-intensive industries such as films, music and books.

While US criticism has been vocal, Europe may actually have been impacted more by the value of the yuan, as the Chinese currency has fallen more than six percent against the euro since the 2005 currency reform.

Bolstering this argument, while Chinese exports to the US markets rose 15.8 percent in the first nine months of the year, exports to the European Union increased by 30.8 percent.