China's Trade Surplus Hits New Record

by: Steven Towns

China's customs bureau reported a record trade surplus of $26.9 billion in June, an 87% y/y increase, driven by exporters rushing to beat cuts in export tax rebates. Economists had expected a surplus of $23.8b on average. The yuan strengthened against the dollar ahead of the data release, for its biggest gain in a month to 7.58. The trade gap with the U.S. accounted for more than half of China's surplus. A Hong Kong-based Goldman Sachs economist commented, "This level of trade surplus is unprecedented for China or any other major economy in the world. China needs to tackle the root cause of its bloating trade surplus: the significantly undervalued currency." June exports climbed 27% to a record $103.3b, while imports rose 14% to $76.4b, the slowest rate in four months. China's first-half surplus totals $112.5b (+85% y/y). In 2006 its full-year surplus was $177.5b.

Sources: Bloomberg
Commentary: The Economist Says There's No Housing Bubble in ChinaInvesting In China: A Quant PerspectiveChina Readies Overseas Investment Fund
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