China's trade surplus widened to a record US$14.5 billion last month as exports surged, increasing pressure on the government to let the currency appreciate.
The surplus widened from US$13 billion in May, the Beijing-based Ministry of Commerce said yesterday on its Web site. It was bigger than the US$12.8 billion median forecast of 26 economists surveyed by Bloomberg News.
Export-driven inflows of cash have pushed China's currency reserves to US$875 billion, the world's largest, and fueled an investment boom that threatens to strain the nation's resources and fan inflation.
US Treasury Secretary Henry Paulson on June 27 called for faster currency gains to redress a growing trade imbalance, as lawmakers seek sanctions against Chinese goods.
"A high trade surplus is not in China's own interest," said Jonathan Anderson, chief Asia economist at UBS AG in Hong Kong.
"They should continue to move to let the yuan appreciate faster," he said.
The central bank has raised interest rates, ordered banks to set aside more money as reserves, and sold domestic bonds to withdraw cash from the banking system. It has also pledged to gradually loosen currency controls.
The surplus in China, the world's fastest-growing major economy, reached US$61.5 billion in the first half, up 55 percent from the same period last year. Exports climbed 23.3 percent last month from year earlier to US$81.3 billion, and imports gained 18.9 percent to US$66.8 billion.
The report "underscores our concern about China's economy and also supports our call for policies to narrow the trade surplus," said Qing Wang, an economist at Bank of America Corp, in a note to clients.
China's trade surplus, which tripled to a record US$102 billion last year, may top US$100 billion again this year as overseas firms build export factories there, Zhai Zhihong, an official at the statistics bureau, said in a report published on June 23.
The surplus has caused a buildup in China's reserves of foreign currency, which doubled in the two years through March, overtaking Japan's as the world's largest. China may report reserves for last month as early as this week.
Economists including Grace Ng at JPMorgan Chase & Co say China should let its currency appreciate faster to curb the gap, which would help limit foreign-currency inflows. The yuan has gained only 1.5 percent against the dollar since China revalued it a year ago, lagging behind gains in other Asian currencies such as the South Korean won.
The central bank has relied on a mix of monetary and administrative policies to slow growth in lending. On April 28, it raised the benchmark lending rate for the first time in 19 months.
Last month, it ordered commercial banks to set aside more money as reserves. The central bank has also sold bonds to select commercial banks and imposed stricter guidance on lending.
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