China’s trade surplus, which continues to rise unabated, however, has major trading partners like the US and EU calling for remedial measures including revaluation of renminbi.

China's trade surplus vaulted to reach a record $262.2 bn in 2007, up almost 50% from $177.47 bn reported in the previous year, according to the China's General Administration of Customs. In 2007, Chinese exports climbed 25.7% to $1.22 tn, while imports rose 20.8% to $955.8 bn. The build up in the surplus has grown to an unprecedented level now, causing discomfort not just to its trading partners but also to the Chinese authorities. In 2004, the country had a mere $32 bn or 1.7% of GDP in trade surplus, which has grown to account for over one tenth of the GDP now. It recorded a jump in surplus with all of its top three trading partners, the EU (27%), the US (15%) and Japan (14%). The move to rein in the exports have, however, brought little relief to the country as exports were lower by 1.5% with imports posting a small rise of 0.9% in 2007. Many experts blame the sluggish domestic demand and strong overseas demand for the widening trade surplus.

Many experts blame the sluggish domestic demand and strong overseas demand for the widening trade surplus. Although a slowdown in exports in the fourth quarter of the calendar year 2007 raised some hopes that further rise in surplus, which is already stoking fears of inflation, could be checked, continued buoyancy in overseas demand for `Made in China' products has done little to soothe the nerves. Given that, it is no wonder that reducing the surplus remains a top agenda for not just the policy makers of China but also for the governments of other economies.

The rising gap between China's exports and imports has extensively been driven by a growth strategy that has relied on soaring external demand, sky-scraping saving and secure investment environment. Many of China's trading partners have stoutly reacted against China's control of the renminbi. China's ability to hold down the value of its currency well below its correct value has resulted in increasing the foreign demand for its products and discouraging domestic consumption of the foreign goods, which are unreasonably expensive in China.

Chinas Trade Surplus, Plenty surplus, Standard Chartered Bank's, Global trade surplus, China's trading marketing, Textiles industry, Value-Added Tax, VAT, US-China Business Council, Britain's Financial Times, Stephen Green, Economist, International Monetary Fund, IMF.