China posted a $7.24 billion trade deficit in March

SHANGHAI (AP) — China posted a $7.24 billion trade deficit in March, its first in almost six years, the official Xinhua News Agency reported Saturday, citing customs figures. Officials say the trend will be short-lived.
The March deficit was China's first since it recorded a $2.26 billion deficit in April 2004.

The return to deficit after many years of surplus could help ease pressure on China to allow the value of its currency to rise against the dollar — a key source of contention with the U.S. and other trading partners.

But even China's minister of commerce, Chen Deming, described March's deficit as only a "blip on the radar," the state-run newspaper China Daily said Friday.

Market trends are the main factor determining the trade balance, said Chen, who had said earlier that China expected to announce the deficit for March.

Exports totaled $112.11 billion in March, up 24.3% from a year earlier. Imports reached US$119.35 billion, up 66% compared to the same period last year, Xinhua reported.

Total exports and imports in March reached US$231.5 billion, up 42.8% from a year earlier, it said. The full trade figures were to be announced later Saturday.

Economists say the deficit reflected weak exports to the United States and other major markets still struggling to recover from the recession. Strong imports of commodities and components to fuel China's own booming industrial sector contributed to the 66% jump in imports — albeit from a relatively low base the year before when China was also just emerging from a slowdown.

"Surging raw materials prices, for crude oil, iron ore, and nonferrous metals, which China buys a lot of for its own strong domestic economy, are another factor," said An Yun, an analyst at Chang Xin Asset Management.

China's global trade surplus was $7.6 billion in February and the combined January-February surplus was $21.8 billion.

Chinese officials have resisted pressure to allow the yuan to rise in value, saying the trade sector remains weak and prey to weaknesses elsewhere.

"China has to be prepared for the uncertainties on the global market as they would create problems and pressure for the nation," Chen, the commerce minister, was quoted as saying.