Commerce Ministry: China's monthly trade deficit likely to continue in H1

16:18, April 12, 2010      

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Monthly trade deficits will likely continue in the remaining months of the first half of 2010 and will possibly improve in the second half, said Yao Jian, spokesman of China's Ministry of Commerce (MOFCOM).

China's foreign trade rose nearly 43 percent in March to more than 231 billion U.S. dollars, according to statistics from the General Administration of Customs (GAC). Of that number, exports amounted to 112.1 billion U.S. dollars and imports to nearly 119.4 billion U.S. dollars with a trade deficit of over 7.2 billion U.S. dollars. This is the first time China recorded a trade deficit since May 2004.

In March, China's trade surplus with the Unite States and EU was down almost 4 percent and over 13 percent, respectively, compared to the same period of the previous year. Meanwhile, China's trade deficit with China's Taiwan region, Japan, South Korea and ASEAN was up by 3.5 billion U.S. dollars, 5.1 billion U.S. dollars, 2.7 billion U.S. dollars and 2.7 billion U.S. dollars, respectively.

Domestic demand drives imports

The main reason behind the trade deficit lies in the shrinkage of labor-intensive exports as a result of rising costs, the deterioration of external markets and the Chinese Spring Festival holidays, said Huang Guohua, head of Statistical Analysis Office of Comprehensive Statistics Department under the GAC. The rise in prices and quantity of imported raw materials also played a role, he said.

"The principal reason behind the trade deficit is the overly rapid rise in imports," said Yao. In March, China's exports stood at 112.1 billion U.S. dollars, an increase of more than 24 percent from the previous year, far below the 66 percent growth in imports.

China's import value rose by 66 percent In March with a surge in the imports of vehicle products as a result of the domestic consumption structure upgrade. China imported 85,000 vehicles in March, up by 270 percent from the previous year, with the import value rising by 240 percent to over 3.2 billion U.S. dollars. The import value of vehicle components rose by 140 percent to over 1.7 billion U.S. dollars. The combined import value of the two categories of products was up by almost 3.3 billion U.S. dollars, equivalent to 45 percent of the trade deficit in March.

China expected to maintain trade surplus in 2010

Yao believed that currently, there is neither a fundamental change in the global investment and consumption situation nor a remarkable recovery in foreign demand, so China's exports will stand at a low level for a rather long period. China's trade deficit will likely continue in the first half of 2010 and improve over the second half.

"China is expected to maintain a trade surplus for the whole of 2010, although with considerable shrinkage," he said.

The entire year's trade surplus is estimated to further plummet after it decreased by as much as 100 billion U.S. dollars in 2009.

The trade deficit is not too serious because it was not caused by losses in exports.

"The shrinkage in trade surplus will not only help improve China's balance of international payments which will gradually lead to a general balance of international payments, but it will further balance the trade and economic relations between China and other countries around the world."

Transforming development mode is more important

China maintained a 20 percent annual growth rate in foreign trade between 2002 and 2008, with the total export and import value more than quadrupling. However, there is still a considerable gap between China and great trade powers in Europe and the U.S. in terms of the structure, technology, innovative capacity, per capita foreign trade value and profitability of the export industries.

"Although China's traditional foreign trade structure has not had significant changes, the trade value with emerging markets has surged," said Yao. In the first quarter of 2010, the trade value between China and ASEAN totaled about 62.9 billion U.S. dollars, an increase of over 61 percent. China has signed free trade agreements with ASEAN, Chile, Pakistan, New Zealand, Singapore, Peru, Costa Rica and other countries and regions that will surely promote closer economic and trade exchanges.

China exported mechanical and electrical products of nearly 189.1 billion U.S. dollars in the first quarter, representing an increase of nearly 32 percent from the previous year and accounting for almost 60 percent of China's total import and export value. The surge in mechanical and electrical products with higher technologies and added values reveals that China has secured the capacity to further participate in the reallocation of the global industrial value chain, and the competitiveness of China's equipment industry is improving.

Advancing the trade mode and structure is also a direction for promoting the upgrade and transformation of China's foreign trade. Customs statistics show that the value of China's general trade increased 48 percent in the first quarter to almost 309.7 billion U.S. dollars, almost 4 percentage points higher than that of China's total import and export value during the same period, or over 9 percentage points higher than that of processing trade. This indicates the continual advancement in China's trade.

By People's Daily Online

(Editor:祁澍文)

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