China's first quarterly trade deficit in six years will effectively ease the pressure on RMB appreciation (picture)

China's first quarterly trade deficit in six years will effectively ease the pressure on RMB appreciation (picture) Source: Xinhuanet China Customs General...

China's first quarterly trade deficit in six years will effectively ease pressure on RMB appreciation (picture) Source: Xinhuanet Data released by China's General Administration of Customs on the 10th showed that a cumulative trade deficit of US$1.02 billion occurred in the first quarter of this year, marking China's first quarterly trade deficit in six years. Experts believe that China's foreign trade import and export have reached a basic balance, which will effectively alleviate the pressure of RMB appreciation. Customs statistics show that China's total foreign trade import and export value in the first quarter was US$800.3 billion, a year-on-year increase of 29.5%. Among them, exports reached US$399.64 billion, an increase of 26.5%; imports reached US$400.66 billion, an increase of 32.6%. In March, exports were US$152.2 billion, an increase of 35.8%; imports were US$152.06 billion, an increase of 27.3%. The trade surplus for the month was US$140 million. Li Jian, a researcher at the Institute of International Trade and Economic Cooperation of the Ministry of Commerce, believes that the first-quarter foreign trade data shows that China’s policies of paying equal attention to imports and exports, stabilizing exports, and striving to expand imports are being implemented, and foreign trade imports and exports have achieved a basic balance. "China's foreign trade data in the first quarter sent a relatively positive signal. China's foreign trade imports and exports are developing in a more balanced direction, and the RMB currency is not undervalued, which is appropriate." said Zhou Shijian, a senior researcher at the Center for Sino-U.S. Relations at Tsinghua University. "China does not deliberately pursue a surplus, and some countries' accusations of China's manipulation of exchange rates are self-defeating." The U.S. Treasury Department issued a statement on the 8th local time saying that it would postpone the "International Economic and Exchange Rate Policy Report" for major trading partners that was originally scheduled to be released on April 15. Judging from past experience, the RMB has been designated as the focus of attention. The People's Bank of China authorized the China Foreign Exchange Trading Center to announce that on April 7, 2011, the central parity rate of the RMB exchange rate in the inter-bank foreign exchange market was 6.5456 yuan per US dollar, setting a new high since the exchange rate reform. From the central parity rate of RMB against the US dollar of 6.6215 on January 4, the first trading day of this year, the appreciation rate of RMB has reached 1.16%. Zhang Yansheng, director of the Institute of Foreign Economics of the National Development and Reform Commission, said excessive pressure on the appreciation of the renminbi will increase the risk of bankruptcy for Chinese export companies. At present, the average import price of internationally traded commodities such as iron ore, crude oil, and grain continues to remain high. China's "labor shortage", "wage increase tide", and industrial relocation will also become long-term trends. The rapid appreciation of the RMB will undoubtedly worsen the situation for export companies. Zhou Shijian said that the United States' request for faster and more appreciation of the renminbi is unreasonable. This will have a hugely damaging impact on China’s economy, exports and businesses. He suggested that the RMB exchange rate should learn from the experience of the German currency's "snake-like floating" and achieve narrow fluctuations, which would have less adverse impact on China's economy and exports. Customs analysis shows that factors such as the domestic economy maintaining rapid growth, the sharp increase in commodity prices in the international market, and the long Spring Festival holiday are important reasons for China's trade deficit in the first quarter. Zhou Shijian said that the first quarter is the off-season for exports, and China's peak export season is concentrated from July to October. Therefore, the trade deficit in the first quarter cannot represent future import and export trade trends. As seasonal factors weaken, the trade surplus will continue, but the growth rate will narrow and gradually tend to be balanced. When Wen Jiabao, Premier of the State Council of China, recently conducted a survey on economic performance in Zhejiang, he emphasized that as imports and exports tend to be balanced, the focus of work must be on maintaining stable growth of foreign trade and optimizing the import and export structure. It is necessary to maintain the basic stability of foreign trade policies, accelerate the transformation of foreign trade development methods, adhere to science and technology to promote trade, win through quality and market diversification, actively promote the transformation and upgrading of processing trade, and comprehensively improve the quality and efficiency of foreign trade. "China must intensify its efforts to adjust its industrial structure." Zhou Shijian said that while expanding imports, export policies must remain stable and should not make major changes. "Exports cannot decline." According to customs statistics, in the first quarter of this year, China's general trade import and export reached US$417.92 billion, an increase of 34.8%. The trade deficit under general trade was US$45.98 billion, an increase of 66.5%. During the same period, China's processing trade import and export volume reached US$291.91 billion, an increase of 21.4%. The trade surplus under processing trade was US$77.11 billion, an increase of 22.8%. Zhang Yansheng said: "China needs to complete the transformation of its economic development and foreign trade development model, from a stage driven by factors such as labor, land and environment, to a stage driven by scale and innovation. Moderately increasing the import of non-productive products and vigorously increasing the import of foreign advanced equipment, technology, and talents needed to accelerate trade transformation and upgrading are the directions for China to optimize its import structure. At the same time, China must strengthen the export of traditional export projects and emerging industries, and improve the cross-border service capabilities of the modern service industry."