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Last Updated: Monday, 11 September 2006, 10:01 GMT 11:01 UK
China trade surplus at new high
A bank worker counts Chinese yuan
The US has been calling for the yuan to be strengthened
China's trade surplus with the rest of the world reached a record $18.8bn (10bn) in August, beating both July's $14.6bn record and analysts' forecasts.

The figure, released by the official Xinhua news agency, will intensify the debate about whether China's currency, the yuan, is undervalued.

Some of China's trading partners, especially the US, have argued China keeps the yuan low to boost exports.

The latest figure brings China's 2006 global trade surplus to $95.6bn so far.

'Comprehensive measures'

Export and import figures are yet to be released, making it hard to assess what specifically has fuelled this latest trade surplus.

But US figures suggest that the growing trade imbalance with the United States is a major factor.

"The price of the yuan appreciation so far has been just too moderate and the trade surplus is related to structural problems," said Xiao Minjie, an economist with Daiwa Institute of Research.

"The US is likely to step up its pressure on China to let the yuan rise," he added.

The yuan has risen by less than 2% since being revalued in July 2005 after being tied to the dollar.

China's currency and its trade surplus are expected to be key issues at this week's World Bank and International Monetary Fund annual meeting, in Singapore, which will focus on global imbalances in the world economy.

Talking at China's Business Summit, China's Vice Premier Zeng Peiyan said China would adjust its money supply and credit and take "comprehensive measures to mop up liquidity in the banking system".

"We will also improve the formation mechanism on the renminbi's [the name given to the yuan internally] exchange rate."

Since April, China has raised interest rates twice, as well as demanding higher reserves for banks, in a move to control the expanding economy and stem inflation.


SEE ALSO
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