MercoPress. South Atlantic News Agency

China's trade surplus & reserves soar to record highs in 2007

China's trade surplus soared 48% in 2007 to a record high 262.2 billion US dollars as its export-led economic boom continued government figures have shown.

However December's monthly surplus was 22.7 billion US dollars, down from 26.3 billion in November and October's all-time high of 27 billion, but up 9.5% over the same month in 2006, the General Administration of Customs said. China's trade surplus with the US expanded 19% to 163 billion US dollars last year, while its surplus with the European Union grew even faster, up 46% to 134.3 billion. Overall, Chinese exports grew 25.7% to 1.2 trillion in 2007, while the level of imports increased 20.8% to 955.8 billion. The continuing surge in its exports came despite a number of product safety scares last year, over everything from children's toys to toothpaste and clothing items. The latest big annual rise in the surplus is expected to increase pressure on China to allow the Yuan to rise in value. Washington says China keeps the Yuan, undervalued and gives Chinese exporters an unfair price advantage, which adds to the trade surplus. Beijing has allowed the Yuan to rise gradually against the dollar, but the United States is pressing for faster action and some lawmakers are calling for trade sanctions. The EU with a trade gap or 134.3 billion US dollars and rising, has been pressing similar demands on Beijing in recent months to let the Yuan rise in value and to ease restrictions that European companies say impede imports and investment in China. China counters that it is moving towards allowing the Yuan to trade more freely, but says it can only move slowly on the issue for fear of derailing its export-dominated economic growth. Actually the sustained high trade surpluses, which send a flood of cash coursing through the fast-growing economy, have strained the government's ability to contain pressure for prices to rise and inflation has become a problem. The central bank drains billions of dollars a month from the economy through bond sales to reduce inflation pressure and has piled up the world's biggest foreign currency reserves. The central bank said the reserves rose 43% in 2007 to 1.53 trillion. Beijing says it is not actively pursuing high surpluses and has been trying to narrow the trade gap by imposing curbs on exports of steel and some other products that are deemed too energy-intensive or polluting.