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China's trade surplus shrinks

Jan 10 2011 11:11 Sapa-AFP

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Beijing - China said Monday its trade surplus shrank sharply in December, but the issue is still likely to be a sticking point in Sino-US trade talks when President Hu Jintao visits Washington next week.

The country's trade surplus narrowed to $13.1bn in December, customs authorities said - a sharp drop from the $22.9bn recorded in November and below analyst forecasts given by Dow Jones Newswires for $21.7bn.

But the surplus will nevertheless add to the already huge volume of money flowing into the world's second-largest economy and could fuel inflation.

For the entire year, the trade surplus stood at $183.1bn compared with $196.1bn in 2009.

The value of exports and imports hit record highs last month, customs authorities said.

Exports rose 17.9% in December from a year earlier to $154.15bn while imports rose 25.6% to $141.07bn, the data showed.

The latest figures are likely to keep the pressure on China to loosen its grip on the yuan when Hu visits the United States, a major critic of the country's controversial exchange rate policy.

China maintains a tight grip on the yuan despite pledging last June to let the currency trade more freely against the dollar.

Critics say the Chinese currency is massively undervalued and gives the country's exporters an unfair advantage.
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