Trade Deficit

[trev]

China has reported its first monthly trade deficit in almost six years.

The official news agency report said figures released by the customs authorities showed a trade deficit in March of more than $7 billion.

Chinese officials were preparing the ground for this announcement here even before the customs agency announced the March trade figures.

A vice minister of commerce said the growth in imports was due to the huge amounts of iron ore, copper, crude oil and coal that were needed to power the Chinese economy.

Prices for these raw materials have been rising steadily.

Meanwhile exports while improving were still weak, especially to key markets like the United States and Europe.

Senior Chinese politicians have said it could take three years for exports to reach the levels they were at before the global economic crisis began.

A surprise to me, I thought their surpluses were so high, they could not run deficits at this stage.

[DanS]

I don't think the situation has changed fundamentally -- i.e., over the long-haul we can expect continued very large Chinese trade surpluses.