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China trade surplus hits record

China's trade surplus rose to a record $26.9bn (£13.4bn) in June, almost double the level it was at last year.

Exports drove the increase, surging 27% to a record $103.3bn, as firms rushed to beat cuts to export tax rebates.

China's government has been working to rein in its export boom, imposing taxes on some goods and repealing rebates.

But the surplus increase is still likely to fuel tensions with the US, which has accused Beijing of having an overly weak currency to boost exports.

Official figures showed that the trade surplus with the US was $14.1bn in June and $73.9bn for the first six months of the year.

The surge in demand also came despite a number of safety scares in recent months, including lead-painted toys and tainted toothpaste.

Soaring Chinese imports have led to demands in the US Congress for legislation to impose punitive tariffs or other controls on goods.

US critics have also called on Beijing to take more positive action to allow the yuan to appreciate faster in value.

US firms have accused China of keeping the yuan low to boost exports, thus sparking American job losses.

In an effort to stem protests from its harshest critics - the US and Europe - China has been taking steps to slow the booming export market, including imposing export tariffs and cutting import duties.

However, its decision to withdraw export tax rebates on 1 July led to a surge in exports in June, as traders tried to beat the deadline.

Possible article commentaries could discuss the problems of mercantilism which is the attitude the US have adopted to the Chinese budget surplus. Mercantilism is essentially the false notion that originated in 16th century France, which states that a country benefits more from exporting than it does from importing when in reality the opposite is true. By explaining the concept of comparative advantage you could show how it is the US that is benefiting from the cheap Chinese goods because it doesnt have to waste resources producing these goods domestically any more and is also avoiding huge budget deficits by having to import these goods at higher prices from more inefficient producers. You could also write a commentary on the adverse effects of a budget surplus which include things such as a currency appreciation (so far the yuan has been kept artificially low)and a lack of variety of domestic produce because the majority of the things produced domestically are produced for exporting purposes. Another idea would be to write about the implications of tariff imposition and how imposing such a tariff has become increasingly hard due to WTO regulations (use example from US attempt to impose a tariff on chinese steel). Finally a more simple approach would be to write an entire commentary on comparative advantage and how the reason for these US job losses is because it is trying to produce in an industry where it doesnt have comparative advantage (textiles and industrial produce) whereas it would be much better off leaving the cinese to specialise in such sectors and switching to specialising in service sectors which is what it produces best i.e. its area of comparative advantage.