China Loves Playing with Fire.

Talk about playing with fire...

" China's trade surplus soared to a record $26.9 billion in June, exceeding economists' estimates and supplying ammunition for U.S. lawmakers threatening sanctions unless the yuan appreciates faster. "

The YoY change is incredible.

" The trade gap, released by the customs bureau today, widened by 87 percent from a year earlier after exporters rushed to beat cuts in export tax rebates. "

Let the trade wars begin...

" More than half of the surplus was with the U.S., where lawmakers last month introduced legislation to punish nations that use their currencies to gain an unfair advantage. Today's figures may heighten tensions already exacerbated by scares over Chinese exports from contaminated seafood to defective tires. "

Its the undervalued Yuan.

" The country needs "to tackle the root cause of China's bloating trade surplus: the significantly undervalued currency.'' "

Changes are being made. But are they enough?

" The yuan has strengthened 9.2 percent since a peg to the dollar was scrapped. That compares with a 12 percent gain by the euro and an 8.9 percent fall by the yen. "

Source: China's Trade Surplus Soars to Record $26.9 Billion (Update4) (http://www.bloomberg.com/apps/news?pid=20601068&sid=asWUJisr4ZqA&refer=economy)