June trade surplus hits new high

Updated: 2007-07-10 19:09

China's trade surplus soared to a new monthly high in June, the government said Tuesday, showing that demand for Chinese goods remains strong despite concerns about their safety.

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The surge came despite a series of recalls of Chinese-made products in the United States, as well as Beijing's efforts to cool booming export growth and calls by some US lawmakers for trade sanctions on China.

The June trade surplus widened 85.5 percent from a year ago to US$26.9 billion, the country's Customs agency said on its Web site. That pushed the total surplus for the first half of the year to US$112.5 billion, breaking the US$100 billion barrier for the first time for a six-month period, the agency said.

Exports in June soared 21.7 percent to US$179.6 billion while imports grew 14.2 percent to US$76.4 billion, the customs agency said.

The agency forecast that total trade this year should rise 20 percent to more than US$2 trillion, with a surplus in excess of US$200 billion, the official Xinhua News Agency reported. Through six months, total trade came to US$980.9 billion.

Beijing insists it is not actively pursuing a trade surplus and has tried to cool the boom by repealing rebates of value-added taxes for exporters and imposing new taxes on some goods such as steel.

In another step to restrain the growth of the ballooning surplus, a state news agency said the government has eliminated an 8-year-old program that rewarded big exporters with preferential interest rates on loans and other privileges. The report by the official Xinhua News Agency gave no figures on how companies would be affected.

"Ending the grading system was a decision made in line with the current trade situation," Xinhua quoted a statement from the government's foreign exchange regulator as saying.

The United States and other governments have ordered recalls or imposed controls in recent weeks on Chinese imports of tires, toothpaste, seafood and other goods after finding safety flaws or toxic contamination.

But demand in the United States, Europe and elsewhere for low-cost toys, furniture, shoes and other goods pouring out of thousands of Chinese factories has stayed strong.

At the same time, import growth has been slowed by government efforts to contain a boom in construction and investment that it worries could cause financial problems.

China has reported its four highest monthly trade surpluses in the past nine months. The June figure broke the US$23.8 billion record set in October and also surpassed February's US$23.7 billion and May's $22.4 billion.

Critics of Beijing's trade record say its currency controls are partly to blame for the gap. They say China keeps its yuan undervalued, giving exporters an unfair price advantage.

Some US lawmakers are calling for legislation that would impose punitive tariffs or other controls on Chinese imports if Beijing fails to let the yuan rise faster in value.

The customs agency said total two-way commerce with the United States, China's second-biggest trading parner, rose by 17.4 percent to US$140.5 billion for the first six months of year, but it gave no figure for the bilateral surplus or a June trade figure.

The United States reported a trade deficit of US$232.5 billion with China last year _ its biggest ever with any country _ and this year's gap is expected to exceed that.

Exports have brought a huge influx of foreign money into the country, straining Beijing's ability to contain price pressures. The central bank drains billions of dollars a month from the economy through bond sales and has piled up the world's largest foreign reserves at US$1.2 trillion.

Despite those efforts, inflation has risen steadily in recent months, climbing to 3.4 percent in May from the year-earlier period, the highest level in more than two years.

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