China Yuan undervalued, higher Imports

The World Bank last month raised its estimate for China's growth this year to 10.4 percent from 9.6 percent because of improved prospects for exports to Europe and developing countries. China's economy, the world's fourth largest, expanded 11.1 percent in the first quarter. The trade surplus may swell to $250 billion-$300 billion in 2007 from a record $177.5 billion last year
U.S. Treasury Secretary Henry Paulson has urged the Chinese government to move swiftly on currency reform to head off protectionist legislation in Congress.
Some U.S. lawmakers said last month that the Yuan was undervalued by 40 percent to make China's exports cheap and pledged trade sanctions as punishment
The Chinese government widened the Yuan’s trading band on May 18 to allow moves of as much as 0.5 percent each day against the U.S. dollar, although fluctuations had never reached the previous 0.3 percent limit.
The pace of the Yuan’s gains against the U.S. dollar accelerated in May.
The 0.74 percent monthly rise was the biggest since China scrapped a 10-year peg to the dollar and revalued the currency in July 2005.
It has gained 7.9 percent against the dollar since the end of the fixed exchange rate.
The Chinese government last month said it will boost imports to narrow a trade surplus with the U.S. that last year reached $232.5 billion. The Ministry of Finance raised export taxes on 142 products and cut tariffs on 209 types of imports from June