China's surprise trade deficit as imports surge

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The Independent Online

The Chinese economy is still growing apace, though it recorded a surprise trade deficit for the month of March as imports surged.

Imports were 14 per cent higher last month than they had been a year earlier, much higher than the 5 per cent rise students of the Chinese economy had pencilled in.

Exports are still on the up, but only by 10 per cent, leading to a deficit of £577m. That compares to a surplus of $15.3bn (£9.98bn) in February.

Analysts said that's a likely reflection of sluggish or no growth in the US and Europe, where consumer spending has slowed.

China itself also experienced stronger demand for commodities such as copper and oil.

The deficit may signal that domestic demand is picking up and China's attempts to move away from export-led growth were working.

Beijing has said that it wants to increase domestic demand and boost imports in order to reduce its dependence on exports and achieve more sustainable growth.

Haibin Zhu, chief China economist at JPMorgan in Hong Kong, said March's figure may "suggest this cycle is probably coming to a turning point".

"If domestic demand turns out to be stronger than expected, it's definitely positive for the economic outlook," he added.

One curiosity in the figures is that exports to Hong Kong jumped by 93 per cent. This prompted the now customary scepticism from some quarters about the reliability of Chinese economic data.