Last year, China's trade surplus soared 74.2% to a record $177.47 billion.

Exports in the Jan.-Sept. period rose 27.1% year on year to $878.2 billion while imports were up 19.1% to $692.6 billion.

Xinhua, China's State news agency says this year's trade volume is likely to reach a record $2 trillion compared with $1.76 trillion  in 2006, according to analysts.

With government restrictions on exports of natural resources, China's exports of crude oil in the first nine months dropped 49.3% to 2.44 million tons.

Meanwhile, imports of crude oil rose 13.6% to 1.24 trillion tons, while imports of refined oil dropped 8% to 26.8 million tons. The oil imports were valued at $63.7 billion.

Last year in an article in Business Week, Standard Chartered economist Stephen Green wrote that China may well be treating some capital inflows as export income:

Much of China's trade surplus in 2005 was not trade at all, we think, but rather capital inflows (perhaps as much as $67 billion) disguised as trade. If so, this has major implications for China's trade policies, the yuan, and the way the U.S. deals with China.

China shocked much of the world last year when it reported that its global trade surplus had more than tripled to $102 billion or 4.5% of revised gross domestic product. To some trade hawks and U.S. congressmen this number provided yet more evidence that Chinese exports were contributing to the hollowing out of the U.S. manufacturing sector and stealing American jobs. And they believed this was achieved unfairly, that Beijing had manipulated its currency and engaged in suspect policies such as extending unfair utilities subsidies to Chinese factories and banning workers from joining trade unions to give China an economic edge.

Because of China's comparative advantage in labor-intensive manufacturing, plenty of others accepted the big spike at face value. Given China's international image as the "world's factory," it made sense to them that China's exports should have swelled. But the sudden rise in the number puzzled economists.

Why? Well, first, we know countries that export a lot tend also to import a lot -- and none more so than China. It's a developing country with few natural resources, dependent on Asian and Western firms sending in components to be assembled in coastal factories. As a percentage of GDP, China's trade surplus was actually declining through 1999 to 2004.

RELATED

China's manufacturing sector accelerated in September; Threat of sharp downturn after the Olympics in 2008