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China yesterday reported its second-biggest monthly trade surplus on record, handing more ammunition to critics who say Beijing gains an unfair trade advantage by keeping the yuan undervalued.

The surplus in July was US$24.36 billion, down from June's record high of US$26.91 billion, but above forecasts of US$22.5 billion and dwarfing the July 2006 figure of US$14.6 billion.

Economists had expected export growth to taper off after factories rushed to ship goods in June before rebates of value added tax were cut or scrapped on July 1 on 2,800 export lines.

But annual export growth in fact accelerated to 34.2 per cent from 27.1 per cent in June despite a string of recalls of Chinese products in a number of countries, notably the US, due to safety concerns involving everything from toys to toothpaste.

'It shows Chinese exporters are still scrambling to export despite government tightening,' said Li Yushi, vice-director of a Ministry of Commerce think-tank