China’s current account surplus edged up last year both in dollar terms and relative to the size of the global economy. We suspect that further increases lie ahead as China’s investment spending slows. Meanwhile, the latest data show that the People’s Bank has started accumulating foreign exchange again – some $23bn in December. These two developments together, at a time of growing talk of “currency wars”, suggest that pressure on China to permit faster appreciation of the renminbi will soon reappear.
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