China's Trade Surplus Sets Record
Exports Jump 21.7% Despite Bad Press
The trade surplus for June almost doubled compared with last year, as companies rushed orders before a tax change that takes effect this month.
(By Kevin Lee -- Bloomberg News)
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Wednesday, July 11, 2007; Page D08
BEIJING, July 10 -- China's trade surplus with the rest of the world jumped to a record $26.9 billion in June, despite recent threats from Congress that it would impose punitive measures to control the trade imbalance between China and the United States.
The surplus was almost double that of June 2006, as Chinese companies scrambled to get orders out before the end of a tax regime that favored major exporters. So many companies were trying to get their goods out before the July deadline that "especially in the last two days of June, the vans were waiting at the port for, like, 10 kilometers," said Chen Feixiang, director of the economics and finance department at Tongji University.
"All companies are rushing to export before July, so those that were supposed to export in the second half of year did so the first half of the year," said Wang Yuesheng, a professor of international economics and trade at Peking University.
The new figures, released by the government's customs bureau Tuesday, showed that exports in June rose 21.7 percent to $179.6 billion, while imports grew by 14.2 percent to $76.4 billion.
U.S. lawmakers have accused the Chinese government of keeping the value of China's currency, the yuan, artificially low to give Chinese companies an advantage over competitors abroad. China has responded to U.S. complaints by saying that it also thought the yuan's value should go up but that it would do so at its own pace. Chinese leaders have tried to close the trade gap by encouraging citizens to buy more goods made in the United States, and the Chinese government has sent its state-owned companies on shopping sprees there.
The trade deficit shows that demand for Chinese products remains high despite recalls and bans related to the safety of such exports as seafood, tires and toothpaste.
Indeed, China's export capacity is continuing to expand, with fixed capital investment rising more than 25 percent in the first five months of 2007, compared with the same period last year, said He Weiwen, a consultant to the Commerce Ministry. He said investment in labor-intensive products was even higher; for furniture, it was up 54 percent, and for footwear and hats, it was up nearly 40 percent.
Staff researcher Crissie Ding in Shanghai contributed to this report.
