A model of Beijing’s central business district made of Chinese 100 yuan bank notes. (AFP)

Hong Kong, Oct. 25: China has surged ahead of Germany for the first time to become the world’s top exporter, prompting ever louder demands from the US and Europe to revalue the yuan.

Data from the World Trade Organisation show that China vaulted past the US at the beginning of this year and has since moved at lightning speed to eclipse Germany’s once indomitable export machine. It shipped $111-billion worth of goods in August, up 55 per cent from a year earlier.

Now boasting 8 per cent of global exports, China has jumped up the technology ladder. Machinery, equipment and cars now make up 46 per cent of total exports, while textiles are fading from the picture.

Beijing let the yuan break through the key barrier of 7.5 to the dollar on Wednesday, but seems determined to resist western pressure for faster appreciation.

US treasury secretary Henry Paulson said it was in China’s own interest to let the yuan rise, given the clear signs of overheating.

Beijing’s policy of holding down the yuan through purchases of US and other foreign bonds has caused reserves to mushroom to $1,430 billion, raising inflation to 6.5 per cent.

By delaying, China is importing inflation. This will ultimately have the same effect on its competitiveness by pushing up labour costs, but at a greater cost to political and economic stability. Food price rises are now nearing levels that set off the Tiananmen Square protests in 1989.

Veteran US investor Jim Rogers said he was pulling his money out of all dollar assets to buy yuan, yen and Swiss francs. The latter two have been hit by “carry trade” speculation, which must reverse at some point.

“The US economy is undoubtedly in recession. Many parts of industry are actually in a state worse than recession. If it were not for (Federal Reserve governor) Bernanke injecting huge amounts of money, the stock market would probably be down much more than it is,” he said.

Japan yesterday said its exports to the US plummeted 9.2 per cent in August, a sign that contagion from the US downturn may be spreading.

In Washington, Congress has already drawn up plans for sanctions against China, accusing the regime of stealing market share by manipulating the yuan.

Peter Mandelson, the EU trade commissioner, has warned Beijing that it must curb the tidal wave of goods flooding EU markets, or risk turning a friend into a foe.