China has announced a huge February trade surplus, fuelling criticism its currency is undervalued, just hours after the central bank promised to make the yuan more flexible.
Official figures showed there was a near-record $23.8 billion trade surplus last month, which is up 51.7% from a year earlier, and is certain to spark more protests that China keeps the yuan deliberately undervalued to gain an export advantage.
China's surplus last year soared 74% to hit a record $177.5 billion ; but some economists are pencilling in $230 billion for 2007.
February exports totalled $82.1 billion, while imports increased 13.1% to $58.3 billion, the General Administration of Customs said today.
The trade surplus is a major bone of contention with China's trade partners, especially the United States which claims a weak yuan is a major contributor to the problem.
As a supplementary policy, exchange rate policy can have a certain function as price leverage and can help adjust the balance between imports and exports, central bank governor Zhou Xiaochuan said today.
And a statement issued suggested slightly more vigourous application of this leverage in the year ahead.
'The managed floating exchange rate regime will be further improved and the flexibility of the exchange rate will be enhanced,' the statement from the bank said said.
'We will keep the exchange rate basically stable at an adaptive and equilibrium level,' it said.
In July 2005, China delinked the yuan from the dollar and since then it has risen by nearly 7% against the US unit.
Even as the central bank promised a more flexible yuan, Zhou today gave no direct indication of concrete measures, such as whether the trading band might be expanded.
Some local economists argued, based on February's trade data, that there was no direct way of addressing the surplus via the exchange rate.
