China’s Trade Surplus Widens in June, Adding Pressure on Yuan

[Joanne98]

July 11 (Bloomberg) -- China’s trade surplus widened to the highest this year and exports climbed more than estimated to a record in June, adding pressure on the government to let the currency gain after the U.S. said the yuan “remains undervalued.”

The gap increased 140 percent to $20.02 billion from a year earlier, the nation’s customs bureau said yesterday. That compares with the $15.6 billion median estimate of 24 economists Bloomberg News surveyed. Exports surged 44 percent and import growth moderated for the third month, rising 34 percent.

U.S. Treasury Secretary Timothy F. Geithner said July 8 he will “closely” monitor the yuan’s appreciation after China scrapped a two-year peg to the dollar and allowed a 0.8 percent advance in the past three weeks. Policy makers in the world’s biggest exporting nation may be reluctant to step up gains while Europe’s debt woes threaten demand, even as the bureau said trade has “recovered” to levels before the global crisis.

The surplus “points to the need for Chinese authorities to allow continued appreciation of the yuan against the U.S. dollar, given their pledge to allow market forces to determine the exchange rate,” Wang Qing, a Hong Kong-based economist at Morgan Stanley, said. He estimates the yuan will gain 4 percent by the end of this year and 6 percent next year.

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