Asia Economy China reports first quarterly trade deficit in 7 years; Issues report on claimed US human rights abuses
By Finfacts Team
Apr 11, 2011 - 4:57 AM
Chinese Premier Wen Jiabao gestures while holding an online chat with Internet users at two state news portals, Beijing, Feb. 27, 2011.
China on Sunday reported its first quarterly
trade deficit in seven years, reflecting surging prices of imported commodities
while raising fears that growth may be easing. China also on Sunday issued a
report on claimed US human rights' abuses.
Meanwhile, China reported that its currency , the
renminbi (RMB), or the yuan, on Monday gained 19 basis points (0.19%) from
Friday to hit a record high of 6.5401 against the US dollar. Last June a
2-year old peg to the US currency was ended, when the rate was 6.83.
On China's foreign exchange spot market, in a managed float, the yuan can rise
or fall 0.5% from the central parity rate each trading day. The central parity
rate of the RMB against the dollar is based on a weighted average of prices
before the opening of the market each business day.
On Sunday, China's General Administration of
Customs (GAC) reported a trade deficit of $1.02bn compared with a trade surplus
of $13.91bn in the first quarter of last year. It was the first quarterly
deficit since Q1 2004.
China's exports increased 26.5% year on year to $399.64bn while imports soared
32.6% to $400.66bn from a year earlier, figures from the GAC showed.
In March, China had a small trade surplus as the
trade balance swung to a $139m surplus from a $7.3bn deficit in February.
According to the official news agency, Xinhua, the GAC said China imported more
mechanical and electrical equipment, including cars, iron ores and soybeans than
it did in the same period a year ago and that the prices of those commodities
had all shot up.
China's Spring Festival, or Lunar New Year -- the most important traditional
Chinese holiday -- in February, also contributed to the trade deficit, analysts
Xinhua said the quarterly numbers signaled that China's trade has struck a basic
balance between exports and imports, and its trade policies of stabilizing
exports while increasing imports has taken effect, said Li Jian, research fellow
from the Chinese Academy of International Trade and Economic Cooperation
affiliated with the Ministry of Commerce.
Further, the trade data showed that China's economy was evolving in a more
balanced direction, said Zhou Shijian, senior research fellow from the Center
for US-China Relations, Tsinghua University.
It also showed that the yuan, was not undervalued and "some countries'
allegation of China's currency manipulation can not hold water, said Zhou,
adding that China has no intention to pursue a trade surplus."
Also on Sunday, China hit back at US criticism of the recent arrest of the
country's most famous artist, Ai Weiwei, who has been critical of the Communist
Party, with a report from the State Council, or cabinet, titled,
The Human Rights Record of the United States in 2010.
Among the charges are: "90% of US women have suffered some form of sexual discrimination
in the workplace; some 20m women are rape victims in the country; One in four
women is a victim of domestic violence."
The People's Bank of China is slightly ahead and growth will moderate, says Tai Hui, regional head of economic research, SE Asia at Standard Chartered Bank who expects a sharp rise in inflation figures from China this week:
Russell Jones, global head of fixed income strategy at Westpac Institutional Bank urges caution on China, and expects the RMB to appreciate further: