China posts biggest trade deficit in decade

March 11th, 2012 - 11:18 am ICT by IANS  

Beijing, March 11 (IANS) China has posted a trade deficit of $31.5 billion last month, the biggest in at least a decade as imports increased faster than exports.

Exports expanded by 18.4 percent year on year to $114.4 billion in February, recovering from the retreat of 0.5 percent in January, while imports surged by 39.6 percent to $145.9 billion, rebounding from a slump of 15 percent in January.

Taking seasonal factors into consideration, export and import growth in February should be 4 percent and 9.4 percent respectively, the General Administration of Customs said in a report Saturday.

The results were welcomed by economists after China Friday reported a slowdown in other key economic data, including industrial production, fixed-asset investment and retail sales in the first two months, the Shanghai Daily reported.

“Trade performed better than expected and thus eased pressure for the government to release growth-supportive policies,” said Xue Jun, an analyst at CITIC Securities Co.

“If exports can continue such growth momentum, it may delay cuts in the reserve requirement ratio,” said Xue.

Li Maoyu, an analyst at Changjiang Securities Co, said such a big trade deficit may also slow the appreciation of the yuan.

“It’s not rare for China to report a trade deficit in February but it’s very uncommon for the country to register such a large trade deficit,” the daily quoted Li as saying.

“It will weaken claims by some other countries that the value of the yuan gives Chinese export firms an unfair advantage,” he added.

China may “appropriately” widen the yuan’s trading band to better reflect market supply and demand, said Zhou Xiaochuan, governor of the People’s Bank of China, the country’s central bank, during the annual session of the National People’s Congress this month.

In the first two months, China’s trade expanded by 7.3 percent from a year earlier to $533 billion with a deficit of $4.2 billion.

Trade with the debt-stricken European Union (EU) improved by an annualized growth of 4.7 percent between January and February, and deals with the US increased by 9.2 percent. Both were negative in January, the Customs data showed.

China’s trade with emerging markets improved as shipments to Russia surged by 31.9 percent in the first two months.

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