Official figures released by China showed that its trade surplus has shrunk for the first time in eight months in December.
The trade surplus for December was recorded lower at £8.4 billion ($13.1 billion) as imports grew by 25.6 percent over the same period, last year.
Exports grew by 17.9 percent in December, nearly half the rate recorded in November at 34.9 percent.
Analyst’s think that the recent figures will give some breathing space to Chinese President Hu Jintao – who’s scheduled to visit the US from December 18. The US has been pressurizing China to let the Yuan rise to offset trade imbalances.
Wang Han – economist at advisory firm CEBM said “Imports are much stronger than we have expected, indicating that the domestic investment and internal demand are mainly pushing up domestic consumption”.
China still enjoys huge trade surplus, though the growth rate of its surplus has fallen by 7 percent over 2009 to $183.1 billion.
The US has been threatening to take China to WTO over currency manipulation. China is understood to have kept the Yuan undervalued artificially making it a net exporter at the cost of its trading partners.
The US senate is set to discuss a bill which empowers the government to take retaliatory actions against countries manipulating their currencies.
China had allowed the Yuan to rise after it relaxed the fixed exchange rate in June. However, the currency has only risen by 3% since then.