Mainland imports surge as annual gap hits record US$262b The mainland's politically sensitive trade surplus grew less than expected last month, as Beijing's efforts to slow exports took hold and surging oil prices bloated import costs. Still, the trade gap for the full year surged to a record US$262.19 billion, a sign that pressure on Beijing to accelerate yuan appreciation is unlikely to ease any time soon. Last month's surplus climbed 8 per cent from a year earlier to US$22.68 billion, less than the US$24.5 billion estimated by economists. That compared with a US$26.28 billion surplus in November and US$27 billion in October. China's thirst for commodities, especially foodstuff and oil products last month pushed imports 25.7 per cent higher to US$91.7 billion - the highest level last year - outpacing a 21.7 per cent growth in exports to US$114.4 billion, China Customs said yesterday. Beijing is trying to engineer a slowdown in exports to reduce trade tensions with the United States, which accuses the mainland of deliberately depressing the value of the yuan to help its own manufacturers. The surplus helped increase the mainland's foreign exchange reserves - already the world's biggest - to a fresh record of US$1.52 trillion at the end of last month. M2, the broadest measure of money supply, grew 16.7 per cent to 40.3 trillion yuan last month, the slowest growth in seven months as the People's Bank of China tightened monetary policy. Beijing is intensifying efforts to tame runaway inflation, restore the trade balance and weed out heavily polluting industries. But whether it can slow export growth and boost the yuan's value enough to please its core trading partners, the US and the European Union, remains to be seen. Beijing allowed the yuan to appreciate faster in recent weeks but has no intention of loosening control entirely, as a much stronger currency will cause harm to the nation's industrial heartlands. The US and EU, which accounted for 19.1 per cent and 20 per cent of the mainland's total trade last year respectively, have repeatedly urged Beijing to loosen its tight grip on the yuan exchange rate. 'Yuan appreciation has to be even faster,' said Tao Dong, Credit Suisse's chief regional economist, noting the currency could gain 10 per cent against the US dollar this year. The yuan yesterday closed at a fresh high of 7.262 to the dollar. Exports powered ahead 25.7 per cent to US$1.22 trillion for the whole of last year, while imports rose 20.8 per cent to US$955.81 billion. Total trade surged 23.5 per cent to a record US$2.17 trillion while the trade surplus grew 47.71 per cent. 'Strong imports suggest Chinese domestic demand was strong, providing a soft landing for its exponential economic growth,' Mr Tao said. 'China offers a buffer amid a gloomy global economic outlook, with the huge uncertainty in the US.' Wang Tao, the head of Greater China economics and strategy at Bank of America, expected exports to slow to 15 per cent due to weaker global demand and Beijing's efforts to discourage exports of low-value goods and certain commodities. Still, she expected the trade surplus for this year to be about US$260 billion, near its historical peak, although strong domestic demand would drive imports. Mr Tao would not call the slowdown in exports growth a trend, and would wait for further data.