China's trade surplus in February 2007 reached $23.8 billon (approximately Rs104,601 crore) for the month, more than nine times higher than in February 2006 and the second highest on record, according to official Chinese data.

Chinese exports rose by 52 per cent in February 2007 from a year earlier, the fastest rise in more than a decade, while imports rose only 13 per cent.

Its steel exports nearly tripled in January and February, furniture exports rose by almost 50 per cent, electronics and machinery by 38 per cent and clothing rose by 44 per cent. Commentators say, the broad-based acceleration reflects global demand for Chinese products.

Rising Chinese trade surpluses have attracted charges from the US of keeping the yuan artificially low in order to boost its exports. The US says that this denies American firms a level field and has demanded the currency be liberalised.

So far, China has resisted US demands to remove currency controls that limit the fluctuation of the yuan to 0.3 per cent from the daily fixed rate. The Chinese central bank governor Zhou Xiachuan has said that "the current trend of imbalanced trade will take some time to be adjusted and addressed."

China's exchange rate policy has been a source of contention in the US, with demands for trade sanctions or stiff import tariffs on Chinese goods unless China allows its currency to appreciate.

Last year, US treasury secretary Henry Paulson and Federal Reserve chief Benjamin Bernanke led a government delegation to China seeking an opening up of the country's currency policy. The central bank said that it would take steps to change currency controls, which at present allow the yuan to climb or fall a maximum of 0.3 per cent from a daily fixed rate. It says, "The managed floating exchange rate regime will be further improved and the flexibility of the exchange rate will be enhanced."

The bank also says that that it would "keep the exchange rate basically stable at an adaptive and equilibrium level", adding that it would also look at ways of opening up its markets and deepening financial reforms.