China’s inflation, trade surplus soar

BEIJING, Sept 11, 2007 (AFP) – China’s inflation hit its highest rate in almost 11 years in August while the nation’s trade surplus soared again, official data showed Tuesday, signalling more interest rate hikes ahead. The United States and other nations argue China’s yuan currency is being kept undervalued, giving Chinese exporters an unfair advantage, and have warned of retaliatory action unless China acts. The data helped trigger a sell-off on China’s stock market, with share prices tumbling 4.51 percent in their biggest one-day fall in over three months as investors fretted over expected government moves to slow the economy.

Propelled by soaring food costs, China’s consumer price index rose 6.5 percent in August from a year earlier, the National Bureau of Statistics said.

The inflation rate was well above the official full-year target of 3.0 percent and the highest since December 1996.

Meanwhile, customs data showed the trade surplus hit 24.97 billion dollars in August, the second-highest on record behind only the 26.91 billion dollars in June, adding more fuel to trade tensions with the United States and Europe.

Economists said the government would act quickly following the August data despite a