At the beginning of 2007, bothforeign investment banks anddomestic commercial banks allthought that last year's RMB appreciationwould grow between 4 to 5 percent; how-ever the realization of a 6.77 percent in-crease has surprised everyone. The RMBhas appreciated much faster than expect-ed, keeping pace with the rise of China'sforeign trade surplus and foreign exchangereserves. China's foreign trade surplustotaled US＄177.5 billion in 2006, and thisyear's surplus already reached US＄ 238billion during the first 11 months of 2007,far exceeding the total from the previousyear. With an ever-widening trade surplusthe subject of RMB exchange rate hascome under increased pressure. Last year,the EU countries have begun to focus onthe significance of RMB appreciation inbilateral relations with China, just as theU.S. has been doing for quite some time.