Image: Chinese factory
Reinhard Krause  /  Reuters file
Toys made in Chinese factories like this one caused serveral recalls in Europe and the U.S., but the world is yet to find a substitue for China.
updated 7/10/2007 3:34:09 PM ET 2007-07-10T19:34:09

By the looks of China’s ever-expanding trade surplus, the world is not ready to wean itself from its dependency on Chinese products, despite reports of tainted toothpaste, fish laced with antibiotics, tires missing a key safety feature and toys with lead paint.

The “Made in China” label has become ubiquitous, helping to push the country’s trade surplus in June to a new monthly high as foreign consumers bought electrical appliances, clothing, low-cost furniture and other products the world has come to depend on China to supply.

The government figures released Tuesday appeared likely to add to U.S. pressure on Beijing and calls in Washington for sanctions despite Chinese efforts to rein in the bulging trade gap.

The June trade surplus jumped more than 85 percent to $26.9 billion from the same period last year, the General Administration of Customs said on its Web site.

That pushed the total surplus for the first half of the year to $112.5 billion, breaking the $100 billion barrier for the first time for a six-month period, the agency said. Total trade in the first half of the year was $980.9 billion.

The agency said total trade for the full year is expected to top $2 trillion, with a surplus in excess of $200 billion, the official Xinhua News Agency said.

Exports in June soared by 21.7 percent to $179.6 billion, the customs agency said, despite decisions by the United States and other governments beginning in early May to recall or impose controls on tires, toothpaste, seafood and other goods from China that were deemed tainted or unsafe.

Imports grew by 14.2 percent to $76.4 billion, the agency said.

Beijing insists it is not actively pursuing a trade surplus and has tried to cool the boom by repealing rebates of value-added taxes for exporters and imposing new taxes on some goods such as steel.

On Tuesday, Xinhua said the government was taking another step to rein in the export surplus by eliminating an 8-year-old program that rewarded big foreign earners with low interest rates and other privileges.

“Ending the grading system was a decision made in line with the current trade situation,” Xinhua quoted a statement from the government’s foreign exchange regulator as saying.

Despite such steps, foreign demand for Chinese goods has surged while import growth has been slowed by government efforts to contain a boom in construction and investment that it worries could cause a financial crisis. That has cut into Chinese purchases of factory equipment and other foreign goods.

China has reported its four highest monthly trade surpluses in the past nine months.

The June figure broke the $23.8 billion record set in October and surpassed February’s $23.7 billion and May’s $22.4 billion.

Critics of Beijing’s trade record say its currency controls are partly to blame for the gap. They say China keeps its yuan undervalued, giving Chinese exporters an unfair price advantage.

Some U.S. lawmakers are calling for legislation that would impose punitive tariffs or other controls on Chinese imports if Beijing fails to let the yuan rise faster in value.

The United States reported a trade deficit of $232.5 billion with China last year — its biggest ever with any country — and this year’s gap is expected to exceed that.

Exports have brought a huge influx of foreign money into the country, straining Beijing’s ability to contain price pressures. The central bank drains billions of dollars a month from the economy through bond sales and has piled up the world’s largest foreign reserves at $1.2 trillion.

Despite those efforts, inflation has risen steadily in recent months, climbing to 3.4 percent in May from the year-earlier period, the highest level in more than two years.

© 2013 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Video: Triumph of “Made in China”


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