China today announced a large $102 billion trade surplus for 2005, triple last year's total. But wait. Excluding its $114.7 billion trade deficit with the United States alone, China actually ran a modest trade deficit of almost $13 billion with the rest of the world. We've been predicting this development all year. China's consumption of consumer and capital goods is growing fast. According to a recent "economic census," the nation's first ever, its domestic services economy is one-third larger than previously thought and accounts for over 40 percent of GDP. These numbers are just one more factor showing that China has not been "manipulating" its currency, the yuan, to gain unfair advantage in international markets via a singular focus on manufacturing exports.
-Bret Swanson
