China posted a third straight trade surplus of more than $20 billion, highlighting friction with the U.S. over claims that the nation’s currency is undervalued.

The $20.03 billion excess in August, reported today by the customs bureau on its website, compared with $15.7 billion for the same month a year earlier. The median estimate in a Bloomberg News survey of 34 economists was $26.9 billion. Exports climbed 34.4 percent, while imports grew a more-than- forecast 35.2 percent.

Today’s report may stoke American lawmakers’ calls for protection from Chinese imports. The U.S. House Ways and Means Committee will discuss next week China’s currency policy after Premier Wen Jiabao’s government limited the yuan’s gain to less than 1 percent versus the dollar since a June pledge for greater flexibility.

“With the yuan appreciating very slowly and U.S. mid-term elections drawing near, it’s inevitable that Sino-U.S. tension will heat up again,” said Ken Peng, a Beijing-based economist at Citigroup Inc., before today’s release. “Chinese officials may face confrontations over the yuan” at forums including meetings of the International Monetary Fund and the Group of 20 nations in coming months, he added.

Non-deliverable yuan forwards indicate that gains against the dollar may be limited to about 1.3 percent in the next 12 months. The currency closed at 6.78 in Shanghai yesterday, compared with the 6.83 peg to the dollar authorities maintained from July 2008 to June 2010.

Economists’ Forecasts

Economists’ median forecasts were for a 35 percent increase in exports and a 27.5 percent gain in inbound shipments.

U.S. Treasury Secretary Timothy F. Geithner said Sept. 8 that “frankly they haven’t let the currency move very much so far” and “we’d like to see them move more quickly.”

U.S. lawmakers including Senator Charles Schumer, a New York Democrat, have pressed the Obama administration to demand a speedier appreciation of the yuan. The house committee will discuss whether China has made “material progress” on the issue and what action Congress and the administration may need to take to address the nation’s exchange-rate policy.

Signs of weakness in the U.S. economy and the global recovery have raised concern about the outlook for shipments from China, the world’s biggest exporting nation. A “drastic” slowdown in demand from the U.S., European Union and Japan combined with large gains by the yuan could slice 0.8 percentage point from economic growth this year and 1.8 percentage points next year, two State Council researchers wrote in Reform magazine last month.

External Pressure

China’s foreign ministry said that external pressure won’t dictate the nation’s currency policy as Lawrence Summers, President Barack Obama’s top economic adviser, visited Beijing this week.

Chinese Commerce Minister Chen Deming said Sept. 8 that commodity price declines and continued U.S. restrictions on exports have contributed to a larger-than-expected surplus. He said he hopes the annual total is less than last year’s $196 billion.

“China’s imports may rebound as the government boosts domestic investment to sustain growth and companies restock,” said Sun Chi, a Hong Kong-based economist at Nomura Holdings Inc.

China’s economic growth slowed to 10.3 percent in the second quarter from an 11.9 percent pace in the first three months of this year as the government trimmed credit growth from last year’s record 9.59 trillion yuan ($1.4 trillion) and clamped down on property speculation.

Original Article by Bloomberg