Europe's trade deficit with China has surged 25 percent in the eight months through August.

 

The euro-area trade gap with China widened to 70 billion euros (US$102 billion) from 55.9 billion euros in the year-earlier period, the European Union's statistics office in Luxembourg said on Friday.

 

China's yuan has dropped seven percent against the euro in the last year, fueling tension over the growing imbalance, Bloomberg News said.

 

China's export growth is dominated by products, including electronics, toys and textiles, while euro-area economies such as Germany, the region's largest, are reliant on machinery and heavy equipment, according to Dominique Barbet, an economist at BNP Paribas in Paris, lessening competition between the economies.

 

China abandoned the yuan's strict peg to the US dollar two years ago.

 

While China remains a focal point for EU attention, a bigger issue may be maintaining export growth in the face of a cooling US economy.

 

(Shanghai Daily November 19, 2007)