China suffers first trade Deficit in six years
For the first time in six years, China announced on Saturday that it has suffered a trade deficit. Chinese authorities announced a deficit of $7.2 billion for the month of March.
Chinese officials were quick to use the opportunity to show that western governments were wrong in their claim that Chinese trade surpluses were driven on the strength of a weak currency. China has now made a deficit on the basis of the same unchanged value of the currency.
Yao Jian, a spokesman for the Ministry of Commerce, said the deficit proves the exchange rate is not the decisive factor affecting trade balance. “China’s trade surplus continued to fall and China even posted a trade deficit in March under a basically stable renminbi exchange rate,” Yao said while announcing the first monthly trade deficit since May 2004.
“This proved again that in an era of economic globalization, it is market supply and demand, and other factors that decide trade balance,” he said in a statement posted on the ministry’s web site. The deficit was caused by higher levels of imports of items that included oil, certain raw materials and vehicles.
State-run television showed Chen Deming, China’s commerce minister, saying that he expected the trade deficit to be temporary. It reflected China’s openness to other economies and was not linked to exchange-rate levels, he added. Other experts said the deficit reflection deviation for one particular month but China will still end this year with a trade
The country’s trade surplus had slid 34.2% to $196 billion in 2009, down by $100 billion compared to the previous year. Yao said he expected the surplus to slip further in 2010. But no Chinese official felt the trade deficit of March would become a trend.
“China never pursued a trade surplus purposefully. We will actively increase imports with stable exports and promote a balanced, coordinated and sustained growth of external trade,” Yao said.