UPDATE 1-German current account surplus said to hit record, eclipsing China
* Ifo says German current account surplus reaches new record high
* Says first surplus vis-a-vis China in decades
* Surplus could fuel criticism of reliance on exports
BERLIN, Jan 14 (Reuters) - Germany's world-beating current account surplus probably hit a new record in 2013 of about $260 billion, the Ifo think tank said on Tuesday, prompting the government to pledge to boost domestic spending and investment.
It may even have eked out the first surplus with China since reunification, Ifo said.
Germany's surplus was far higher than China's, the world's leading exporter, which was in second place with $195 billion, Ifo said. Germany's was equivalent to 7.3 percent of gross domestic product (GDP), once again breaching the European Commission's recommended upper threshold of 6 percent.
"Germany was the biggest exporter of capital in the world," Ifo told Reuters in an emailed response to questions. "Current account surpluses measure the part of a country's savings that is not invested at home.
"Instead of investing a lot at home, Germany exported a large part of its savings abroad."
Ifo said Germany was investing in concrete and financial assets abroad. It was also putting money into bailouts and aid for countries stricken by the euro zone debt crisis.
Exports are traditionally the motor of Germany's economy and critics argue Berlin must do more to spur domestic demand and imports to reduce global economic imbalances and fuel growth worldwide.
The U.S. administration reprimanded Germany in strong terms last year in its semi-annual report to Congress for its economic imbalances.
Yet Germany argues it has more than halved its current account surplus with the euro zone as a share of GDP since 2007 and it is relying more on domestic demand than trade to drive growth at the moment.
"The rise in the current account surplus is due to countries beyond the euro currency bloc, indeed the surplus with euro countries even shrank," Ifo said. "For the first time since reunification, Germany likely achieved a slight surplus vis-a-vis China in 2013."
Germany's secretary of state for economics, Rainer Sontowski, pledged the new coalition government Chancellor Angela Merkel's conservatives and the centre-left Social Democrats, would strengthen domestic demand and had committed to boosting investment at home.
"Everything points to the current account surplus easing as a result of these policies," he said.
But the Munich-based Ifo institute, which each month publishes Germany's market-moving business sentiment survey, said it expected the current account surplus to rise further to 7.4 percent of GDP this year due to a pickup in global trade.
The European Commission introduced a 6 percent threshold in late 2011 along with its macroeconomic imbalance procedure which seeks to prevent harmful imbalances among European member states by ensuring appropriate and coordinated policy responses.
Officials have, however, previously said a surplus is preferable to a deficit so action is less likely to be taken against countries exceeding the 6 percent limit than against those with a deficit below the minus 4 percent lower limit.