st time in 13 years, as the trade surplus swelled to a record. People's Bank of China Governor Zhou Xiaochuan Jan. 8 said China may increase the flexibility of the yuan, one of only three of 15 Asia-Pacific currencies to rise this year, as the surplus expands. The gap has drawn criticism from some U.S. policy makers who accuse China of limiting gains to boost exports.
"China needs to let the currency gradually appreciate to deal with growing foreign-exchange reserves, trade surplus and exports," said Masashi Hashimoto, a currency analyst in Tokyo at Bank of Tokyo-Mitsubishi UFJ Ltd. "The trend for the yuan to strengthen will continue."
The yuan rose 0.08 percent this week to 7.7984 to the U.S. currency at 5:30 p.m. in Shanghai, according to the China Foreign Exchange Trade System. It Thursday traded as high as 7.7936, the strongest since a decade-long dollar link was scrapped last year. The yuan slipped 0.05 percent Friday to equal 1.000 per Hong Kong dollar.
It may rise to around 7.77 in a month, Hashimoto said.
The surplus rose 74 percent to a record $177.5 billion last year as exports surged, the government said Thursday. The gap has soared almost eight-fold since 2001, when China joined the World Trade Organization.
U.S. Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben S. Bernanke, visiting Beijing last month, urged China to relax controls on its currency to ease the imbalance.
China's economic growth slowed in the fourth quarter, according to a statement from the country's top economic planning body.
The economy expanded 10.5 percent in 2006 from a year earlier, National Development and Reform Commission head Ma Kai said Friday in a statement on the organization's Web site, down from 10.7 percent growth over the first three quarters.
