China's monthly trade surplus probably topped $30 billion for the first time, adding fuel to U.S. complaints the yuan is undervalued.
The gap widened 29 percent in October from a year earlier to $30.8 billion, according to the median estimate of 14 economists surveyed by Bloomberg News. The government may release the figure as early as today.
U.S. Treasury Secretary Henry Paulson, due in Beijing next month for talks, said yesterday China is ``out of step'' with the rest of the world's calls to let the yuan appreciate. A plunge in the dollar to a record low against the euro adds pressure on China to allow faster gains to staunch a flood of cash that's stoking stock and property bubbles.
``Faster exchange-rate appreciation would be the best way to manage the excess liquidity,'' said Glenn Maguire, chief Asia economist at Societe Generale SA in Hong Kong. ``As we move into the U.S. election season, China's trade surplus will become a more sensitive political issue.''
Exports likely rose 22.8 percent in October from a year earlier, the same pace as in September, the Bloomberg News survey showed. Imports probably increased 19.2 percent after a 16.1 percent gain in the previous month.
The yuan had its biggest weekly advance against the dollar since July 2005, a 0.60 percent gain, to close at 7.4108. Faster yuan appreciation could reduce the inflow of money by making exports more expensive. The currency has gained 11.7 percent versus the dollar since a fixed exchange rate ended.
`` China is increasingly seen as out of step with international norms and expectations, as evidenced by the growing number of national leaders and multilateral institutions calling for currency appreciation,'' Paulson said in New York. China needs ``more flexible prices, including a much more flexible, market-driven exchange rate,'' he said.
China's central bank said last night in a monetary-policy report that it will ``strengthen the role of prices in managing the economy'' and improve the coordination of interest-rate and exchange-rate policies. It also said moderate currency appreciation may help to ease inflation pressures.
Consumer prices rose 6.2 percent in September from a year earlier, close to the fastest pace in a decade. The CSI 300 Index of stocks has climbed almost 150 percent this year, while property prices in the 70 biggest cities rose 8.2 percent in the third quarter from a year earlier.
French President Nicolas Sarkozy said this week that France and the U.S. agree China ought to stop depressing the value of the yuan to gain an export advantage.
The predicted October surplus would bring the 10-month total to a record $216.4 billion, up 62 percent from a year earlier. Export volumes are biggest in the final quarter because of Christmas shipments.
``The level of exports is so far above the level of imports that imports would have to grow considerably faster than exports just to stop the surplus growing any more,'' said Mark Williams, an economist at Capital Economics Ltd. in London. ``There is no sign that this is going to happen any time soon, so we can expect to see some more huge surpluses in coming months.''
The expected 29 percent growth in the surplus in October compares with a 56 percent gain in the previous month to almost $24 billion.
That suggests exporters are ``feeling the pinch'' from currency appreciation and government curbs such as cuts in export-tax rebates, according to a note from Sun Mingchun, an economist at Lehman Brothers Holdings Inc. in Hong Kong. ( Bloomberg )