China has raised the stakes for high-level economic talks with the US by reporting a near-record monthly trade surplus and telling Washington that its exchange rate is a matter of national sovereignty.
The surplus for November of $22.9 billion, just shy of October's record $23.8 billion and more than double that of November 2005, handed fresh ammunition to US critics who say China is unfairly holding down the value of its currency to give its exporters an edge in global markets.
US Treasury Secretary Henry Paulson, who leads a delegation to China this week, warned Beijing on Friday that the world was growing impatient for economic and currency reforms.
Following up on Monday in an article he wrote in the Washington Post, Paulson added: 'The US believes China can do more to reduce its trade surplus. We are encouraging China to introduce greater flexibility for its currency.'
In response, a senior Chinese central banker reaffirmed the country's determination to let market forces play a greater role in determining the yuan's exchange rate, but said currency adjustments alone could not iron out trade imbalances.
China has let the yuan rise by around 3.45% since it revalued the currency by 2.1% in July 2005, but US lawmakers and business groups say the currency remains grossly undervalued given China's bulging balance of payments surplus.
