MercoPress. South Atlantic News Agency

China's trade surplus in January jumps beyond all forecasts

China's trade surplus soared 22.7% in January as the economy continued to boom despite efforts to cool the rate of growth, official figures have shown. The gap between what China exports and what it imports grew to 22.7 billion US dollars last month, 15.9 billion a year earlier.

China's exports in January increased 26.7% to 109.7 billion, the biggest year-on-year rise in six months while imports rose 27.6% to 90.2 billion, the biggest increase in almost two years. The latest trade surplus figure was bigger than market estimates and is likely to renew criticism from the US and European Union, who have accused China of undervaluing the Yuan to make its exports artificially cheap. Chinese leaders have repeatedly insisted they are not actively pursuing large surpluses. Democrats who have control over the US Congress argue that US manufacturing has lost three million jobs since 2000 to Chinese cheap imports. Beijing says its trade surplus with the world last year rose 47.4% to 262.2 billion US dollars. While Beijing still does not allow the Yuan to float freely against other currencies, it points out that the currency's value has increased by 13% since 2005 against a basket of currencies from China's main trade partners. Beijing argues that it cannot move any faster on liberalizing the Yuan for fear it could destabilize the country's export-led economic boom. China has instead moved to cool both exports and its overall breakneck economic growth through policies such as increased taxation, interest rate rises, housing and property regulations and limits on how much money banks can lend to businesses. Some experts anticipate that a slowing US economy might cut demand for Chinese goods slightly, but they still expect China to continue to run a large surplus with the United States. Friday's trade data suggested that China could expect strong growth this year despite a possible slowdown in the United States which is a key export market. The managing director of the International Monetary Fund said Friday that China might be affected by a U.S. slowdown but its economy still should expand by about 10% this year down from 11.4% in 2007. "While we are experiencing a decrease in growth in advanced economies, it is even more necessary than before to have a high level of growth in China" said Dominique Strauss-Kahn, who was in Beijing for meetings with Chinese leaders. Beijing also has tried to rein in exports of wheat and other grains in order to increase domestic supplies and cool an inflation spike blamed on shortages of pork and grain. The massive influx of export revenues has strained Beijing's ability to restrain pressure for prices to rise. The central bank drains billions of dollars a month from the economy through bond sales and has piled up 1.53 trillion US dollars in reserves. Strauss-Kahn said he has urged Chinese leaders to ease currency controls, saying a more flexible exchange rate would help to achieve their goal of reducing reliance on exports. "More domestic demand growth will be what China needs, not export-driven growth," he told reporters.