China: Trade Deficit in March 2013

Econintersect:  Chinese exports rose by 10% in March 2013 compared to 2012, led by increased trade with the U.S.  However, according to Bloomberg, the result was less than the forecast of a gain of 11.7%.  Combined with a larger than expected increase in imports that left China with an unexpected trade deficit for the month of $884 million.  The narrow deficit was the first time the trade balance has not shown a substantial surplus in the past 13 months.

For the entire first quarter China reported a trade surplus of $43 billion, a significant increase over the same period in 2012 when the country eked out a meager surplus of just $660 million.  The first quarter a year ago saw a massive trade deficit over $31 billion for February.  Click on graph for larger image.

The higher than expected imports and the narrow miss for exports in March was generally viewed as potentially promising with increased stockpiling of materials for improved output later in the year.  The situation is entirely consistent with the report from Reuters that the China Commerce Ministry has pledged to boost imports as part of efforts to balance its trade accounts and move the economy toward more domestic consumption.

Below are so selected excerpts from the press reports on China’s balance of trade results.

Wall Street Journal:

Although China runs a large trade surplus with the rest of the world, it also isn’t unusual for the country to post a monthly deficit early in the year as manufacturers stock up on imported raw materials that are assembled into exports later in the year.

Bloomberg:

“China’s export growth is expected to decelerate further in the second quarter as demand in the U.S. and Europe remains weak,” Li Wei, a Shanghai-based economist with Standard Chartered Plc, said before the release.

Bloomberg:

A weakening yen may also pose challenges for China’s exports, complicating the nation’s monetary policy, billionaire investor George Soros said this week at the Boao Forum for Asia in China. Japan’s currency has fallen about 22 percent against the yuan in the past six months as new Prime Minister Shinzo Abe steps up efforts to beat deflation.

Financial Times:

“The much faster than expected import growth was mainly driven by a surge of imports from the US and Taiwan, while the yen weakness has not yet affected Chinese imports from Japan,” said Liu Ligang, chief China economist for ANZ Bank.

Reuters:

“Import growth has been much weaker in the past several months compared to exports. One major concern is import weakness is relative to the weakness in domestic demand, so the stronger than expected import growth for March suggest this cycle is probably coming to a turning point,” Haibin Zhu, chief China economist at JP Morgan in Hong Kong, told Reuters.

John Lounsbury

Sources:

• China Posts Trade Deficit (Aaron Back, The Wall Street Journal, 09 April 2013)
  

• China Export Gains Miss Forecasts for First Time in Four Months (Xin Zhou and Paul Pankhurst, Bloomberg, 09 April 2013))

• Chinese trade with US surges in Q1 (Jamil Anderlini, Financial Times, 10 April 2013)

• China Records Mild Trade Deficit in March After Imports Jump (Reuters, CNBC, 09 April 2013)