China sees first quarterly trade deficit in six years

Under the influence of several factors, such as the rapid growth of China's domestic economy, the sharp rise of commodity prices in the international market and the Spring Festival holiday, China reported a 1.2-billion-U.S.-dollar trade deficit in the first quarter of 2011, the first time in six years, according to the General Administration of Customs (GAC) on April 10.

China's import value in March hit a record high

Data from the GAC shows that China's export value stood at more than 399.6 billion U.S. dollars in the first quarter, an increase of nearly 27 percent compared with the same period of 2010, and China's import value stood at nearly 400.7 billion U.S. dollars, an increase of nearly 33 percent. This is the first time that China has experienced a quarterly trade deficit in six years. The scale of China's trade surplus stood at more than 13.9 billion U.S. dollars in the first quarter of 2010.

China's import growth has been faster than exports after the international financial crisis. Data shows that China experienced 7.3 billion U.S. dollars of trade deficit in February 2011 and had previously experienced more than 7.2 billion U.S. dollars of trade deficit in March 2010.

China's total import and export value stood at nearly 304.3 billion U.S. dollars in March 2011, an increase of more than 31 percent compared with the same period of 2010. China's import value in March 2011 stood at nearly 152.1 billion U.S. dollars, breaking the record of more than 144.3 billion U.S. dollars in January 2011, an increase of more than 27 percent, and China's export value in March 2011 stood at 152.2 billion U.S. dollars, an increase of nearly 36 percent. Although China's import growth is slightly lower than exports, the scale of China's imports has been close to exports, resulting in only a 140-million-U.S.-dollar trade surplus in March 2011.

China imported more bulk commodities at higher prices

The strong growth in imports is the main reason behind the first-quarter trade deficit, the GAC said on April 10.

According to statistics from the GAC, China imported 180 million metric tons of iron ore in the first quarter of 2011, up over 14 percent from a year earlier, and the average price rose by nearly 60 percent to 156.5 U.S. dollars. In the meantime, soybean imports dropped by nearly 1 percent to 11 million tons, while its average price rose by nearly 26 percent to 573.9 U.S. dollars.

Sang Baichuan, director of the International Business Institute under the University of International Business and Economics, said that the weak U.S. dollar and soaring prices of bulk energy commodities are two of the most important reasons for the trade deficit. China is heavily dependent on foreign oil and iron ore, and it imports large amounts of such resources each year. In addition, China adjusted its trade policy and greatly increased its imports after the global financial crisis.

Mei Xinyu, a researcher at the Chinese Academy of International Trade and Economic Cooperation under the Ministry of Commerce, said that the first-quarter trade deficit does not indicate an annual trade deficit. In fact, China is more likely to maintain a trade surplus in 2011. The hikes in the amounts and prices of imported bulk commodities are an important reason behind the strong growth in imports and the trade deficit in the first quarter.

By Zhang Hongyu, People's Daily Online

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