China’s renminbi pushed through the trading barrier of Rmb7 to the dollar on Thursday, a landmark that underlines the currency’s importance for Beijing in curbing inflation and discouraging marginally-priced exports.

The currency’s rise coincided with the announcement that the government had revised gross domestic product in 2006 and 2007 to new highs because of an underestimation of the contribution of the service sector.

GDP growth was revised up to 11.9 per cent for last year, from the initial figure of 11.4 per cent, and to 11.6 per cent for 2006, compared with the previous estimate of 11.1 per cent.

The renminbi, which ended the day at Rmb6.9916 to the dollar, has now risen by about 4 per cent this year, the fastest pace of appreciation since Beijing dropped its dollar-peg in mid-2005 to move to a managed float.

After years of foreign pressure, Beijing now sees significant domestic benefits from a currency firming against the dollar, which helps to make imports cheaper and puts downward pressure on inflation, which hit an 11-year high in February.

A stronger currency also helps takes the steam out of the country’s swelling trade surplus, which is the prime driver of the continuing build-up of foreign exchange reserves.

The currency, along with stricter enforcement of labour and environmental standards, has made life tougher for the many exporters in China’s “workshop of the world” that have thin profit margins.

Such an outcome is ostensibly in line with central government policies, which offer incentives to industry to enter businesses which keep more of their value and profit in China.

“It is a signal of evolution as manufacturers are forced to move further up the value-added chain, in a similar manner to Korea and Taiwan over a decade ago,” said Ben Simpfendorfer, of Royal Bank of Scotland, in Hong Kong.

Xu Xianchun, of the National Statistics Bureau, said on Thursday that the slowing economies of the US, Japan and the European Union would inevitably impact on China and its exports.

“According to our initial judgment, 2007 might be the peak of this rapid growth cycle of the economy,” he said in an article in the bureau’s in-house paper.

Although the renminbi has been rising against the dollar, it has continued to weaken against the euro this year, a source of growing angst in Europe, now China’s biggest trading partner.

“The renminbi hasn’t really been strengthening all that much against the basket [of currencies].

It’s just following everyone else up against the [weak] dollar,” said Jonathan Anderson, of UBS.

The size of China’s 2004 economy was revised up by 17 per cent after the results of a nationwide economic census were reported in 2006, primarily to take account of a services sector much larger than previously reported.