China reported its first monthly trade deficit in nearly six years, a shift expected to be short-lived that may give Beijing only a slight respite from pressure to revalue its currency.
The US$7.24 billion trade deficit for last month, reported yesterday by China’s customs administration, was China’s first since a US$2.26 billion deficit in April 2004. Though expected, it was significantly bigger than many economists had forecast. It follows four straight months of narrowing trade surpluses.
The return to deficit after many years of surplus comes as China is being pressured to let the value of its currency rise against the dollar — a key source of friction with the US and other trading partners.
Zheng Yuesheng (鄭躍聲), chief of the customs agency’s statistics department, said the 60 percent rise in China’s imports in January-March, compared to a year earlier, was a boon to “the balanced growth of the world economy.”
“This kind of trade deficit is healthy because it appears when exports and imports both grow rapidly,” Zheng said on national television.
Zheng echoed other officials in predicting that China’s trade will soon return to surplus, though he said that it will likely tend to be more balanced than in the past.
Commerce minister Chen Deming (陳德銘) had warned last month that the deficit was likely, but said it would only be a short-lived phenomenon for the nation’s export-dependent economy.
China’s exports totaled US$112.11 billion last month, up 24.3 percent from a year earlier. Imports reached US$119.35 billion, up 66 percent compared to the same period last year, the Customs Administration said in data posted on its Web site.
In the first three months of this year, China still posted a global trade surplus of US$14.5 billion, down 76.7 percent from the first quarter of last year. The trade surplus was US$7.6 billion in February and the combined January-February surplus was US$21.8 billion.
China is to announce other economic data for the first quarter on Thursday.
Exports plunged last year as demand evaporated in markets stricken by the global recession. However, massive stimulus spending helped rekindle growth at home, and the economy expanded by 10.7 percent in the final quarter of last year.
“China’s trade deficit will likely prove temporary. With an anticipated recovery in developed economies this year, Chinese exports should improve gradually over the coming months,” Jing Ulrich (李晶), head of China equities for J.P.Morgan, said in a note to clients.
Economists say the deficit for last month reflected relatively weak exports to the US and other major markets. China recorded a US$9.87 billion trade surplus with the US in March and a US$30.7 billion surplus for the first quarter, the customs figures showed.
China’s trade surplus with the EU was US$7 billion in March and US$29.3 billion for the first three months of the year.
Chinese officials insist that the stability of China’s yuan is crucial because the trade sector remains vulnerable to weaknesses elsewhere. Critics say Beijing has kept the currency artificially low to boost exports, resulting in massive trade surpluses with the US and Europe.
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