BEIJING, Apr 10 – China posted its first monthly trade deficit in six years in March as imports rocketed, far outstripping the growth in exports, customs officials announced on Saturday.
Commerce minister Chen Deming had warned last month that the deficit was likely, but said it would only be a short-lived phenomenon for the nation\’s export-dependent economy.
Customs authorities said China\’s exports rose 24.3 percent in March to 112.1 billion dollars from the same month a year earlier, while imports soared 66 percent year-on-year to 119.3 billion dollars.
The trade deficit stood at 7.2 billion dollars, they said.
The announcement came amid growing international pressure for Beijing to allow the yuan, China\’s currency, to appreciate.
Critics say Beijing has kept the currency artificially low to boost exports, resulting in massive trade surpluses with the United States and Europe.
But China has defended its exchange rate policy as necessary for the survival of Chinese manufacturers and to support jobs growth, and analysts said Beijing would likely use the deficit to bolster that argument.
"That\’s going to be used as supporting evidence by those who oppose a move in the currency to argue that trade flows are adjusting independently of the exchange rate," said Brian Jackson, senior strategist at Royal Bank of Canada.
But he said China could still let its currency appreciate "not to placate international pressure… but because it\’s in their own domestic interest to do so, in terms of dealing with inflationary pressures."
Economists at Morgan Stanley predicted a March deficit in a recent note, and said they expected it to be "temporary".
"Export and import growth rarely sustain large deviation from each other, given the large share of export processing trade in China’s exports," the note said.
Jackson said the deficit was partly the result of seasonal factors, as Chinese exports tend to pull back at the beginning of the year after having surged in the previous quarter ahead of the US holiday season.
"There has also been an adjustment in the yearly trade balance," he said.
"If you do a 12-month rolling sum of the trade balance, that shot up to very extreme levels from 2006 to 2008, and it started to come back down."
The financial crisis took its toll on China\’s exports, forcing the world\’s third largest economy to start adjusting its focus onto domestic demand.
Beijing has tried to play down expectations for a strong pick-up in exports this year, with commerce minister Chen saying last month that it could take up to three years to return to pre-financial crisis levels.
And China\’s growth has rebounded much faster than the rest of the world, which has led its imports to grow faster than its exports.
The Asian nation returned to double digit growth in the last quarter of 2009, and expanded by a total of 8.7 percent for the whole year on massive public spending and rampant bank lending.