Economy

Deficit just a blip on the radar

By Ding Qingfen (China Daily)
Updated: 2010-04-09 09:23

Nation will look to achieve trade balance, says commerce minister

BEIJING: The likely trade deficit in March is only a blip on the radar and will in no way hamper the nation's strong economic growth, Chen Deming, minister of commerce, told China Daily on Thursday.

Chen Deming, minister of commerce, said China is committed to open and free trade. [Gu Yu / For China Daily]

Chen said China believes in maintaining the trade balance and is not keen on a deficit or a surplus, as it cannot afford to deal with either of them.

The minister made these remarks at the signing ceremony of the China-Costa Rica Free Trade Agreement. The China-Costa-Rica pact is the first clinched by the nation with a Central American country.

Though March trade figures have yet to be announced, Chen said the nation is likely to see a trade deficit in the month.

Playing down concerns, Chen said, the deficit was a clear indicator of the open policy towards foreign trade (imports). At the same time it is also a pointer for nations that have recovered from the financial crisis of the challenges that lie ahead, he said.

The minister, however, was confident that the deficit would only be a short-lived phenomenon.

The likely trade deficit in March would be the first such instance in the last 70 months. Premier Wen Jiabao had earlier said there was a trade deficit of around $8 billion for the first 10 days of March.

Economists also concur that the trade deficit is a temporary phase, considering the robust overseas economic recovery and the slowdown in China's imports.

Chen, however, said there are still concerns over the surging prices for the commodities imported by China, along with the high unemployment rates and weak consumption power within the US and EU.

"China has to be prepared for the uncertainties in the global market as these would create problems and pressures for the nation," Chen said.

Reiterating the nation's commitment to open and free trade, Chen said China would strive to achieve this at all costs.

Premier Wen said recently that China was happy to see the trade deficit during the first 10 days of March and the nation would try its best to import more to maintain the balance.

But neither deficit nor surplus is what China pursues. "China is not capable of handling a big deficit, nor would it like to hold large chunks of foreign exchange to reduce risks arising from depreciation of other currencies amid the financial crisis," Chen said.

China has been under pressure of late from the US to revalue its currency, as it claims that the foreign exchange policy is the main reason for the nation's trade deficit.

But Chinese government officials have refuted this and maintain that trade imbalances have no connection with the currency issue.

"The market situation and how open it is to the outside, rather than the foreign exchange policy, has a major say in which direction the trade balance would swing," said Chen.