China records rare quarterly deficit
By Lydia Chen |
April 11, 2011, Monday
|
Print Edition
Print Edition
CHINA yesterday reported its first quarterly trade deficit in seven years on the back of the country's strong economy, rising commodity prices and slower trade activities over the Spring Festival holiday.
The world's second largest economy recorded a deficit of US$1.02 billion from January to March, compared with a surplus of US$13.9 billion in the first quarter of 2010, the General Administration of Customs said.
Imports in the first three months jumped 32.6 percent from a year ago to a record US$400.66, while exports rose 26.5 percent to US$399.64 billion, the administration said.
Wang Tao, China economist at UBS AG in Beijing, said the deficit was temporary and would not change the fact that China will see a trade surplus for the rest of the year.
"The deficit was just seasonal because China's imports are usually strong early in the year when Chinese companies tend to buy a lot of things for their new year business," she said.
That will change soon, and especially in the fourth quarter, when goods that are made in China are sold around the world ahead of Western holidays, she said.
In March, China reported a trade surplus of US$140 million, following a US$7.3 billion deficit in February due to the weeklong Spring Festival holiday.
Wang said the country would see a surplus of US$150 billion for the whole of 2011.
Rising prices for commodities were one of the key reasons for the rare quarterly deficit, Wang said.
Prices of primary products - raw materials and energy - rose 29.7 percent in the first quarter.
The price of iron ore for Chinese steelmakers rocketed 59.5 percent in the period from a year earlier.
The costlier commodities will add more imported inflationary pressure on China, Liu Ligang, head of China economics at Australia and New Zealand Banking Group, said yesterday.
China is due to announce inflation figures on Friday, with many analysts forecasting in excess of 5 percent compared to 4.9 percent for January and February.
"China could allow faster appreciation of the yuan to reduce pressure from the imported inflation," added Liu, who formerly worked for the World Bank.
China has faced long-time calls from Western countries to let its currency appreciate more quickly to cut its massive trade surplus.
In the first quarter, trade with the European Union, China's largest trade partner, jumped 22 percent year on year to US$123.7 billion, the administration said.
Trade with the United States climbed 25 percent to US$97.65 billion during the period while that with Japan rose 27.1 percent to US$80.78 billion.
Liu expected a 6 percent rise in the yuan against the US dollar this year while Wang thought it would be around 5 percent.
The yuan reached a 17-year-high of 6.5350 per dollar last Friday.
The world's second largest economy recorded a deficit of US$1.02 billion from January to March, compared with a surplus of US$13.9 billion in the first quarter of 2010, the General Administration of Customs said.
Imports in the first three months jumped 32.6 percent from a year ago to a record US$400.66, while exports rose 26.5 percent to US$399.64 billion, the administration said.
Wang Tao, China economist at UBS AG in Beijing, said the deficit was temporary and would not change the fact that China will see a trade surplus for the rest of the year.
"The deficit was just seasonal because China's imports are usually strong early in the year when Chinese companies tend to buy a lot of things for their new year business," she said.
That will change soon, and especially in the fourth quarter, when goods that are made in China are sold around the world ahead of Western holidays, she said.
In March, China reported a trade surplus of US$140 million, following a US$7.3 billion deficit in February due to the weeklong Spring Festival holiday.
Wang said the country would see a surplus of US$150 billion for the whole of 2011.
Rising prices for commodities were one of the key reasons for the rare quarterly deficit, Wang said.
Prices of primary products - raw materials and energy - rose 29.7 percent in the first quarter.
The price of iron ore for Chinese steelmakers rocketed 59.5 percent in the period from a year earlier.
The costlier commodities will add more imported inflationary pressure on China, Liu Ligang, head of China economics at Australia and New Zealand Banking Group, said yesterday.
China is due to announce inflation figures on Friday, with many analysts forecasting in excess of 5 percent compared to 4.9 percent for January and February.
"China could allow faster appreciation of the yuan to reduce pressure from the imported inflation," added Liu, who formerly worked for the World Bank.
China has faced long-time calls from Western countries to let its currency appreciate more quickly to cut its massive trade surplus.
In the first quarter, trade with the European Union, China's largest trade partner, jumped 22 percent year on year to US$123.7 billion, the administration said.
Trade with the United States climbed 25 percent to US$97.65 billion during the period while that with Japan rose 27.1 percent to US$80.78 billion.
Liu expected a 6 percent rise in the yuan against the US dollar this year while Wang thought it would be around 5 percent.
The yuan reached a 17-year-high of 6.5350 per dollar last Friday.
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