China hit by 1st trade deficit in 6 years
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China's trade balance turned red in March with the country's first monthly trade deficit in six years, the General Administration of Customs (GAC) said Saturday.
China exports were valued at 112.11 billion U.S. dollars in March, up 24.3 percent year on year, while the imports surged 66 percent to 119.35 billion U.S. dollars, resulting in a deficit of 7.24 billion U.S. dollars.
The deficit was China's first since it posted a 2.26 billion deficit in April 2004, according to a report released by the GAC.
China's total foreign trade rose 42.8 percent year on year to 231.46 billion U.S. dollars in March, according to Customs statistics.
In the first quarter, foreign trade rose 44.1 percent to 617.85 billion U.S. dollars, with a surplus of 14.49 billion U.S. dollars though it was down 76.7 percent from the same period of last year.
The country's trade surplus hit 23.7 billion U.S. dollars in February.
Li Jian, a research fellow with the Research Institute under the Ministry of Commerce, said China's trade surplus had been falling since the start of the year.
"The deficit in March was just an extension of this trend," Li said.
He said China did not purposefully pursue a trade surplus and had adopted a policy of encouraging imports and achieving a trade balance over the years.
As the economy improved, any shift in people's expectations towards macro economic policies on liquidity and investment would influence importers' decisions and imported commodity prices, he said.
"Externally, we need to prudently monitor the world economy to avoid risk of a double-dip recession," he said. "Domestically, we need to focus on economic restructuring and transformation of economic growth pattern based on the stable growth of foreign trade."
The GAC attributed the March deficit to shrinking exports of labor-intensive products, surging imports and rising commodity prices.
"The deficit in March is neither a recession, nor can it be sustained," the GAC said in its report, adding the deficit was small and China had maintained a "basic balance" between imports and exports.
The GAC said the deficit accounted for only 3.1 percent of total trade volume in March, much lower than the 10-percent alarm level of a trade imbalance.
"The March deficit stemmed mainly from the fast growth of imports by China amid its efforts to increase imports against the backdrop of the global economic downturn," the report said. "China's efforts (to expand imports) helped with the recovery of world economy and demonstrated its role as a responsible country."
The GAC predicted China's trade surplus might continue to scale down and keep a trade balance for the rest of the year.
Zhao Jinping, an economist and researcher with the Development Research Center of the State Council, anticipated China's exports growth would slow in the second quarter because the base was too low in the first quarter last year when the world was in the middle of the global financial crisis.
Zhao estimated exports growth of 10 to 15 percent for the year, while imports growth would be slightly faster as China's economy had taken the lead in the world recovery.
China would post an annual trade surplus similar to or slightly narrower than last year's, he said.
The country recorded a trade surplus of 196.1 billion U.S. dollars last year, down 34.2 percent from 2008.
"We cannot be too optimistic and we still need in place those policies to stabilize external demand," he said.
GAC figures showed the surplus with the United States in March dropped 3.5 percent year on year to 9.87 billion U.S. dollars and that with the European Union fell 13.1 percent to 6.96 billion U.S. dollars.
However, China's March deficit with Japan more than tripled over the same month of last year to 6.53 billion U.S. dollars while its deficit with the Republic of Korea jumped 76 percent to 6.13 billion U.S. dollars.
The establishment of the ASEAN-China Free Trade Area on Jan.1 greatly boosted China's trade with the bloc, with ASEAN's trade surplus with China rocketing to 2.7 billion from 300 million U.S. dollars last year.
The Chinese mainland's deficit with Taiwan amounted to 7.9 billion U.S. dollars in March, up 78.7 percent year on year.
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