China Says Trade Data Justify Its Yuan Policy

(Wall Street Journal)

China ran its first monthly trade deficit in six years in March, data issued Saturday show, a development that, while likely temporary, was quickly seized on by the nation’s commerce ministry to argue against the need to revalue the country’s currency.

With imports of commodities surging last month, China swung to a trade deficit of $7.24 billion in March from a surplus of $7.61 billion in February, according to figures issued by China’s Customs agency. Overall, imports were up 66% from a year earlier in March, with purchases of crude oil and copper at near-record levels in volume terms. The import bill was further boosted by rising commodity prices.

Chinese officials had said weeks ago that March could well show a rare trade deficit, a development they highlighted to show how China’s strong growth has been boosting its purchases from other countries. China’s trade surpluses have been shrinking as the government’s stimulus plan boosted purchases from abroad. The cumulative trade surplus for the first quarter of 2010 was down 77% from a year earlier, to $14.49 billion. Read more here.

Related: Yuan rise still on cards despite rare trade deficit (Reuters)