China reports surprise trade deficit

| March 10, 2011 | 0 Comments
China reports surprise trade deficit

Official figures have today revealed China returned to a trade deficit last month on the back of a sharp slowdown in exports.

According to the Customs Authorities, exports grew just 2.4% in February on an annual basis to $96.74 billion, while imports rose 19.4% to $104.04 billion.

This compares with a 38% rise in exports in January and a 51% rise in imports.

The figures have resulted in a trade deficit of $7.3 billion (£4.5 billion) - China’s first since March 2010.

The trade deficit figures are closely watched because the US has previously accused China of manipulating its currency to boost exports.

Trade groups have argued that China’s currency, the yuan, also referred to as the renminbi, is kept up to 40% below what its value should be against the US dollar.

Beijing loosened its currency peg last June but the US has remarked that the yuan has appreciated just 3.5% against the dollar since that time.

Meanwhile, in related news, China officially became the world’s second largest economy earlier this year – taking over from Japan, which slides into the third place.

Japan has been hit by a fall in exports and weak consumer demand, while China has benefited from a manufacturing boom.

If the current pace of growth continues in China, analysts believe it will become the world’s largest economy in about 10-15 years time – knocking the US off the top spot.

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