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China posts 8.4 billion dollar trade deficit in first quarter
AFP ^ | April 12, 2004

Posted on 04/12/2004 12:34:02 PM CDT by RWR8189

BEIJING, (AFP) - China's trade deficit widened to 8.4 billion dollars in the first quarter as imports soared, fueled by the country's growing appetite for raw materials and energy to feed its booming economy.

The country reported a 540 million dollar deficit for March, after a whooping 7.8 billion dollar deficit in February, the highest monthly deficit in more than a decade, the People's Daily reported, citing customs figures.

In January, the country posted only a 20 million dollar deficit.

In the first quarter of 2003, China sustained a 1.03 billion dollar trade deficit although it had a trade surplus of 25.5 billion dollars for the year.

Imports are being driven by soaring fixed-asset investment -- which was up 53 percent in the first two months of the year -- and rising prices of raw materials and energy.

Imports surged 42 percent year-on-year in the first quarter to 124.14 billion dollars and were up nearly 43 percent to 46.4 billion dollars in March, on the back of higher imports of iron ore, crude oil, soybeans and edible oil, state press reports said, without giving a breakdown.

Figures released last month show that in the first two months of the year, raw material imports rose 64.9 percent to 16.8 billion dollars, with crude oil imports rising 39 percent to 20.8 million tons and iron ore imports growing nearly 37 percent to 31 million tons.

First-quarter exports jumped 34 percent to 115.7 billion dollars and rose nearly 43 percent to 45.8 billion dollars in March, the People's Daily said.

Machinery and electronic products exports amounted to 63 billion dollars, accounting for 55 percent of total exports during the quarter, with textile exports also up strongly, the report said.

Many analysts have been expecting China to swing into deficit this year or at least see a significant cut in its trade surplus due to rising oil and other raw material imports and prices, weaker export growth and a slowdown in foreign investment, one of the main drivers of export growth.

The country reported a record trade surplus of 30 billion dollars in 2002 but that fell to 25.5 billion dollars last year.

Beijing has come under pressure from its trade partners over its surpluses, especially from the United States, which ran a 124 billion dollar trade deficit with China in 2003, rising from 102 billion dollars in 2002.

Washington claims China keeps its currency artificially low to boost the export competitiveness of its companies and has been calling for a yuan revaluation.

Now, the rising deficit might ease pressure on the government and strengthen the position of Vice-Premier Wu Yi when she meets US Trade Representative Robert Zoellick in Washington next week.