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Shifting gears for a banlanced economy
A sharp decline in the trade surplus during the first half of 2010 indicates that China, the world's fastest-growing major economy, has significantly lifted domestic demand to drive double-digit economic growth.

Such a decisive shift away from its decades-old reliance on exports for growth has so far been less painful than expected.

But it is no cause for optimism as increasing pressure to revalue the Chinese currency still threatens to derail the growth story.

China's trade surplus fell by 42.5 percent in the first six months, compared to a year earlier, to hit 55.3 billion U.S. dollars.

Such a drop in net exports will drag down China's growth if domestic demand cannot expand fast enough to pick up the slack.

At a time when global economic recovery looks very fragile, no country can benefit from a slowdown in the Chinese economy, which has propelled the world out of the worst global financial crisis in over half a century.

However, despite China's contribution to increasing global demand by pursuing balanced trade, some critics have pointed to the trade surplus surge seen in June to blame the nation for keeping the yuan undervalued.

As China's foreign trade has managed to get back to pre-crisis levels, the country's monthly trade surplus in June widened to 20 billion dollars, the highest this year.

Yet, reading too much into June's trade surplus risks missing the broader picture - which is that China's foreign trade jumped by 43.1 percent year-on-year to 1.35 trillion dollars while its trade surplus narrowed by more than 40 percent in the first half.

By achieving such a balanced trade growth without choking overall economic momentum, China is now moving steadily to change its growth model.

That should be a boon, not a matter for blame, to the world economy.

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