China''s trade surplus soars to record $26.9 billion in June

Mumbai: China''s trade surplus rose to a record $26.9 billion in June as exporters rushed shipments ahead of planned cuts in tax rebates by the government.

Exports surged to a record $103.27 billion, or more than the annual economic output of New Zealand. Imports rose to $76.4 billion.

The surplus for the first six months was $112.5 billion, up 84 per cent from a year earlier. Last year''s $177.5 billion trade gap was a record.

Customs data showed annual growth in exports actually slowed in June to 27.1 per cent, compared with 28.7 per cent in May. However, import growth slowed more sharply, to 14.2 per cent, from May''s 19.1 per cent.

The trade surplus, which surpassed economists'' expectations of a $24.0 billion, was much higher than the previous monthly record of $23.8 billion, set last October.

The United States, one of the harshest critics of Beijing''s monetary policy, accounted for about two thirds of the trade balance, with China''s surplus with it reaching $73.9 billion in the first half.

The record may heighten tensions with the US over claims that China uses an undervalued yuan to boost exports and sells unsafe goods such as tainted toothpaste and lead-painted toys.

US lawmakers last month introduced legislation that would allow new duties on exports from countries that use their currencies to put American companies at a disadvantage.
Meanwhile, the yuan closed at 7.5810 against the dollar, its strongest level since it was revalued by 2.1 per cent and decoupled from a dollar peg in July 2005. The currency gained 0.27 per cent on the day, its biggest daily rise so far this year.

It has now risen by nearly 7 per cent against the dollar since the revaluation.

But there is still mounting pressure, particularly from Washington, for Beijing to do more to let the yuan appreciate further in order to end what many critics say is an unfair trade advantage.

Economists, meanwhile, said the slowdown in both export and import growth in June could herald weaker economic growth in the second half.

For one, the slower import growth could be in part the result of weakened demand for capital goods, in response to tightening measures in recent months that have included tougher environmental requirements for investment projects, they said.