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China trade surplus hits record on cheap exports

China's trade surplus soared nearly 50 percent last year to a record, despite safety worries about Chinese products and a slowdown in export growth late in the year, government data released yesterday show.

The sharp rise could add to pressure on Beijing to act on currency controls and import barriers, possibly giving ammunition to US lawmakers who are calling for trade sanctions.

The country's annual trade surplus -- or the amount exports exceed imports -- ballooned to US$262.2 billion, up 47.7 percent from 2006, the General Administration of Customs said.

That was below the US$300 billion figure forecast by some economists, but reflected strong demand for low-cost Chinese exports at a time of concern about the safety of products, ranging from toothpaste and seafood to tires and toys.

"The overall number actually was lower than what we expected, and I suspect it had something to do with, partly, the US story," said Citigroup economist Yiping Huang (黃益平), referring to recent weaker US retail spending, especially during the key Christmas holiday.

Last month's monthly surplus was US$22.7 billion, the customs agency said. That was up 9.5 percent from the same month of 2006 but well below October's record monthly high of US$27 billion.

"The country's soaring trade surplus eased a bit in the fourth quarter last year, with imports catching up and exports slowing down," said a customs agency statement quoted by the official Xinhua news agency.

China has tried to cool export growth by imposing curbs on sales of steel and some other goods. But Huang said exports should continue to grow strongly so long as the US avoids a recession.

"We are not expecting the surplus to decline substantially," Huang said. "We are still expecting the overall trade surplus to rise a bit further" as this year progresses.

China's politically sensitive trade gap with the US expanded 19 percent to US$163.3 billion, customs data show.

The US reported a US$232.5 billion trade deficit with China in 2006 and last year's gap is on track to pass that. The two governments count and compile trade data differently, leading to differing totals.

The trade gap for last year with the EU, Beijing's biggest trading partner, rose much faster, expanding by 46 percent to US$134.3 billion, customs data show.

Exports last year rose 25.7 percent to US$1.2 trillion, while imports rose 20.8 percent to US$955.8 billion, the agency said. It gave no monthly breakdown.
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