China’s politically explosive trade surplus surged to a new monthly high in June as importers worldwide shrugged off recent recalls of toxic and shoddily made goods and extended their buying frenzy for Chinese-produced toys and shoes.

The June surplus soared 85.5 per cent from a year earlier to a record of $29.9 billion (£14.8 billion). The total for the first six months of 2007 has also lifted China’s trade surplus past $100 billion for the first time, to reach $112 billion.

The Chinese customs agency predicted that total trade in 2007 would rise by around 20 per cent to pass $2 trillion, generating a surplus of more than $200 billion, half of which will be with the United States.

Yesterday’s figures substantially exceeded consensus analyst estimates and are expected to reignite calls in Washington for punitive tariffs on certain goods. Last year America logged a trade deficit of $232.5 billion with China – its biggest ever with any country.

The surge comes despite what Beijing claims are efforts to rein-in its export growth via new taxes and the end of tax breaks for big exporters.

On July 1, China cut tax rebates on nearly 3,000 products made mainly for overseas markets. As the deadline loomed, roads around Shanghai ground to a standstill as container lorries rushed to the docks to dispatch the goods.

In June, Washington and some Asian and European governments responded angrily to scandals involving Chinese goods by imposing recalls and import restrictions on those exposed as dangerously faulty, such as tyres, or toxic, such as toothpaste, pet-food and some seafood.

New research in Japan yesterday also predicted that expansion plans by China’s 14 largest car manufacturers could make the country the world’s largest car producer within three years, surpassing America and Japan. Analysts say that the abolition of export tax rebates, affecting around 40 per cent of Chinese manufactured goods, has not been applied to cars.

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