China will probably run a trade deficit of more than $8 billion in March, state media said on Tuesday, citing Premier Wen Jiabao. It would be China's first monthly deficit since April 2004, but is expected to be a one-time blip rather than the start of a new trend for the world's largest goods-exporting nation.
Nevertheless, many in the market think that Beijing will want to see several consecutive months of strong export growth before allowing the yuan to rise, so a deficit in March could put appreciation on hold for a while longer. "To be honest, I was happy when I learnt of the situation (of the expected deficit)," Wen told a gathering of foreign business executives in Beijing, according to the China Daily.
"China is by no means seeking a trade surplus. On the contrary, we have left no stone unturned in expanding imports to achieve a trade balance," he said. China's trade surplus has narrowed over the past four months as imports, stoked by surging domestic demand, have grown faster than exports, which have been weighed down by a sluggish global recovery. But Wensheng Peng and Jian Chang, economists with Barclays Capital in Hong Kong, said that China exhibited a seasonal pattern of smaller trade surpluses in the first quarter of the year.
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