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China’s trade surplus to narrow to $120 billion in 2011

11 April 2011 15:05 (UTC +04:00)

Baku - APA-Economics. China’s first quarterly foreign trade deficit in seven years, is temporary and will prove to be short-lived, as the world’s second largest economy has the vigor to increase exports, experts said, People’s Daily Online reported.

The General Administration of Customs reported yesterday that from January to March, China’s trade was in the red with a deficit of US$1.02 billion, in contrast to a surplus of US$13.9 billion in the spring quarter last year.

China’s Commerce Minister Chen Deming said earlier that he anticipated a smaller trade surplus for the whole year. Experts have predicted a trade gain of US$120-140 billion for 2011.

Rising imports in the first three months caused the deficit. Imports jumped 32.6 percent year-on-year to a record 400.66 billion yuan, while exports rose 26.5 percent to 399.64 billion yuan.

The deficit was widely believed seasonal because China’s imports are usually strong early in the year when the Chinese families hoarded more while celebrating the Spring Festival holidays, and Chinese companies tend to buy a lot in spring for their new-ear business.

That will change soon, and especially in the fourth quarter, when goods that are made in China are sold around the world ahead of Western holidays, experts say.

Rapid rise of imported product prices has contributed to the trade deficit. Prices of major imported products, including iron ore, oil, grain and other items - rose nearly 30 percent in the first quarter.

The growing import prices have also led to higher inflation levels in the first quarter. Consumer Price Index, a major gauge of inflation, jumped 4.9 percent in the first two months, and is forecasted to have soared 5.1 percent in March.

To rein in inflation, Beijing is expected to continue to appreciate its value of its currency, the yuan, experts say. The currency reached a 17-year-high of 6.5350 per dollar on Friday.

Trade with the United States climbed 25 percent to US$97.65 billion during the first quarter while that with Japan rose 27.1 percent to US$80.78 billion.