China reported
its first monthly trade deficit in nearly six years in March, a shift
expected to be shortlived that may give
Beijing only a slight respite from pressure
to revalue its currency.
The $7.24 billion trade deficit in March reported
Saturday by China's customs administration was China's first since a
$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 U.S. and other
trading partners.
Zheng Yuesheng, 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.
In March, China's exports totaled $112.11 billion in
March, 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 $14.5 billion, down 76.7 percent from the first
quarter of 2009. The
trade
surplus was $7.6 billion in February and the combined
January-February surplus was $21.8 billion.
China is due 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. But massive stimulus spending helped rekindle growth
at home, and the economy expanded by 10.7 percent in the final quarter
of 2009.
"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, head of
China equities for J.P.Morgan, said in a note to clients.
Economists say the deficit for March reflected
relatively weak exports to the United States and other major markets.
Strong imports of commodities and components to fuel China's own booming
industrial sector
contributed to the 66 percent jump in imports — albeit from a relatively
low base the year before when China was also just emerging from a
slowdown.
"Surging raw materials prices, for
crude oil, iron ore, and
nonferrous metals, which China buys a lot of for its own strong domestic
economy, are another factor," said An Yun, an analyst at Chang Xin
Asset Management.
China recorded a $9.87 billion trade surplus with the
United States in March and a $30.7 billion surplus for the first
quarter, the customs figures showed.
Exports to the United States rose nearly 20 percent
in March year-on-year, while imports climbed 43 percent.
China's
trade surplus with the European Union was $7 billion in March
and $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.
Beijing
broke a decades-long link with the U.S. dollar in 2005, allowing the
yuan to rise by about 20 percent through late 2008. The government
slammed on the brakes after the crisis hit and has since held its
currency steady against the greenback, saying China cannot afford
further change after losing millions of factory jobs to the plunge in
global demand.
Critics say the yuan is undervalued by up to 40 percent, giving its
exporters an unfair advantage and swelling its trade surplus.
Some U.S. lawmakers have pushed for President Barack Obama to have China
declared a currency manipulator in a Treasury Department report that
was due out this month and could have added to tensions between the two
countries over their chronic trade imbalance.
In a conciliatory gesture, Washington postponed the report ahead of a
visit by
President Hu
Jintao to the U.S. to attend a nuclear conference. Following a
brief stopover in Beijing by Treasury Secretary Timothy Geithner for
talks with a top Chinese official,
Wang Qishan, many expect Beijing to allow
at least a modest change in the yuan's value.
Economists caution, however, that any shift will be gradual and is
unlikely to narrow U.S. and European trade deficits and create jobs.
Supporters of a loosening of controls on the Chinese currency argue that
keeping the yuan's value steady is helping to fuel inflation and
limiting Beijing's ability to manage the economy effectively.
"China can go a lot further in internationalizing its economy and
promoting world growth by making its currency more flexible," Pieter
Bottelier, an economist who formerly headed the World Bank's Beijing
office, told a conference in
Shanghai this week.
David Mikael Taclino
Inyu Web Development and Design
Creative Writer
