Chinese trade gap outstrips forecasts

China posted a trade surplus of $23.4 billion in November, just shy of the record $23.8 billion in October, the official Xinhua News Agency said Wednesday.

The surplus was more than double the November 2005 figure of $10.5 billion and beat the $20.1-billion median forecast of economists polled by Reuters.

November’s figures took China’s year-to-date surplus to $157 billion. For the whole of 2005, the surplus tripled to $102 billion.

The political repercussions of the swelling surplus will be high on the agenda when U.S. Treasury Secretary Henry M. Paulson Jr. and Federal Reserve Chairman Ben S. Bernanke hold talks in Beijing next week.

U.S. manufacturers complain that Chinese exporters have an unfair edge because they believe Beijing is deliberately keeping its currency undervalued.

They want Paulson to press China to let the yuan rise much faster than it has since it was cut loose from a dollar peg in July 2005 to float within managed ranges.

But Yiping Huang, chief China economist with Citigroup in Hong Kong, said a firmer yuan was not a cure-all.

“A stronger currency is helpful in reducing the external account surplus, but the root cause of that problem is in the high savings rate, or relatively sluggish consumption,” he said.

“If that doesn’t change, I’m afraid we have to live with either an overinvestment problem or large current account surpluses, or both,” he added.

Many Chinese policymakers and academics agree and have expressed concern that the surplus is making it harder for the People’s Bank of China to manage monetary policy.

To hold down the yuan’s exchange rate, the central bank buys most of the dollars generated by the surplus.

The domestic currency it issues in return boosts the money supply, fueling an investment boom that risks destabilizing the world’s fourth-largest economy.