China reports trade deficit in March, 1st time in 6 years

Updated: 2010-04-10 11:33
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BEIJING - China's trade balance turned red in March, the country's first monthly trade deficit in six years, the General Administration of Customs (GAC) said here Saturday.

China exported $112.11 billion of goods and services in March, up 24.3 percent year on year, while the imports surged 66 percent year on year to $119.35 billion , resulting in a trade deficit of $7.24 billion.

The March deficit was China's first since it posted a 2.26 billion deficit in April 2004, according to a report released by the GAC.

Combining imports and exports, China's foreign trade rose 42.8 percent year on year to $231.46 billion in March, revealed the customs statistics.

Taking the first three months together, China's Jan-March imports and exports rose 44.1 percent to $617.85 billion, still posting a trade surplus of $14.49 billion in the first quarter though it was sharply down 76.7 percent from the same period of last year.

The GAC attributed the March deficit to shrinking exports of labor intensive products, surging imports volumes and rising commodity prices.

"Neither is the deficit in March a recession, nor can it sustain," the GAC said in its report, adding the deficit was small and China has maintained a "basic balance" between imports and exports.

The GAC said the deficit accounted for only 3.1 percent of total imports and exports in March, a proportion much lower than the alarm level of trade imbalance at 10 percent.

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"The March deficit stemmed mainly from the fast growth of imports by China amid its efforts to increase imports against the backdrop of global economic downturn," the GAC said. "And 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 in 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 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.

According to the GAC figures, China's trade surplus with the United States dropped 3.5 percent year on year to $9.87 billion in March and that with the European Union also fell 13.1 percent to $6.96 billion.

However, China's trade deficit with Japan surged by more than three times over the same month of last year to $6.53 billion while its deficit with Republic of Korea jumped 76 percent to $6.13 billion in March.

The establishment of the ASEAN-China Free Trade Area on January1, 2010 greatly boosted China's trade with the bloc, with ASEAN's trade surplus with China skyrocketing to $2.7 billion from $300 million last year.

The Chinese mainland's deficit with Taiwan amounted to $7.9 billion in March, up 78.7 percent year on year.