Trade surplus hits new high

China announced a record US$13 billion trade surplus for May on the back of a 25% year-on-year rise in exports. This puts exports for the first five months of the year at US$347 billion, up 26% on the same period in 2005, while imports have risen 22% to US$301 billion. Based on this form, China could well surpass the record US$102 billion annual surplus recorded in 2005. Coming shortly after reports that bank loans rose 16% in May while M2 money supply expanded 19.5% both figures well above government targets there is likely to be further pressure on Beijing to introduce further tightening measures and allow greater currency appreciation.