China likely to experience trade deficit in March

China’s export-dependent economy is likely to experience a trade deficit in March, a senior government official warned Sunday, possibly signalling a slowdown in overseas shipments.

Commerce minister Chen Deming also defended the nation’s exchange rate policy, noting a stronger yuan by itself could not resolve global trade imbalances.

Chen’s remarks at the closed-door China Development Forum in the capital were published by the official Xinhua news agency and People’s Daily newspaper and come amid growing international pressure for the yuan to appreciate.

Analysts have warned of a temporary slump in exports this month, after manufacturers cranked up production before China’s Lunar New Year holiday in February to meet overseas orders for the Easter holiday in April.

China’s exports soared 45.7 percent in February, their fastest pace in three years, continuing a rebound that started in December when exports grew 17.7 percent and snapped a 13-month falling streak.

The nation’s trade surplus reached 7.61 billion dollars in February, up 57.2 percent year-on-year, while imports rose 44.7 percent year-on-year to 86.9 billion dollars.

The turnaround in exports has intensified pressure on Beijing to let the yuan — effectively pegged to the US dollar since mid-2008 — appreciate.

The United States and the European Union, key trade partners for China, say Beijing has intentionally kept the currency low to boost its exports, vital to the country’s emergence from the global economic crisis.

But China has tried to play down expectations for a strong pick-up in exports this year, with Chen saying early this month that it could take up to three years to return to pre-financial crisis levels.
Source: AFP