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Chinese trade deficit a possible boon for world economy

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China recorded a rare trade deficit in the first quarter on the back of domestic economic strength and rising global commodity prices, Reuters reported.

From January to March, China imported $1.02 billion more than it exported, marking its first quarterly trade deficit since 2004, the Chinese General Administration of Customs said.

The trade numbers showed that China’s economy is evolving in a more sustainable direction by becoming less reliant on exports, said Isaac Meng, an economist with BNP Paribas in Beijing. That is an essential ingredient in the balancing that analysts say is needed to put the global economy on a more stable footing.

“Even though the exchange rate is only slowly appreciating, strong inflation, especially labor costs, is making the rebalancing happen,” Meng said.

Zheng Yuesheng, statistics chief with the customs administration, told Chinese state television that the first-quarter deficit was likely to be “temporary,” but added that the full-year trade surplus would be smaller in 2011 than 2010.

In March, China reported a tiny trade surplus of $140 million, following a $7.3 billion deficit in February.

China’s exports were up 35.8 percent in March from a year earlier and imports rose 27.3 percent. Economists had expected exports to rise 21 percent for the year and imports to increase 19.5 percent, producing a trade deficit of $4.2 billion, Reuters said.

China has faced calls from the United States, the European Union and others to let its currency, the yuan, appreciate more quickly as a way to cut its yawning trade surplus.

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