Wednesday, March 16, 2011

Signs of trouble: China posts a surprise trade deficit as exports slow

China has reported a surprise trade deficit for the first time since March last year, after exports slowed.

Shipments grew at a weaker-than-expected 2.4% in February from the same month a year ago, latest figures show.

Imports on the other hand increased by 19.4%, resulting in a trade deficit of $7.3bn (£4.5bn), the largest in seven years.

The news comes at a time when China has been facing criticism over its export-led growth policy.

Easing pressure

The US has led criticism of China, claiming it keeps the value of its currency, the yuan, artificially low so that it can boost foreign sales.

A weaker currency makes Chinese goods more affordable, giving the country's exporters an advantage over many competitors.

In recent years there have been repeated calls for China to let its currency appreciate against the US dollar.

Analysts say February's surprise deficit numbers may ease that pressure. (read more)