Page last updated at 10:18 GMT, Saturday, 10 April 2010 11:18 UK

China reports rare trade deficit

By Chris Hogg
BBC News, Hainan

Factory east of Beijing, file image
China's need for raw materials such as coal and oil has pushed it into deficit

China has recorded its first monthly trade deficit in almost six years.

Officials blame the $7.2bn (£4.7bn) deficit on rising volumes and prices of the raw materials the country needs to import to power its economy.

The officials, who announced the figures at an economic conference in Hainan, say the deficit is likely to be a short-term phenomenon.

It comes amid continuing US claims that China's currency controls keep the yuan's value artificially low.

Chinese officials were preparing the ground for this announcement even before the customs agency announced the March trade figures.

The deficit for March was China's first since a $2.3bn deficit in April 2004.

A vice minister of commerce told the BBC the growth in imports was due to the huge amounts of iron ore, copper, crude oil and coal that were needed to power the Chinese economy. Prices for these raw materials have been rising steadily.

Meanwhile exports, while improving, were still weak, especially to key markets like the US and Europe.

Senior Chinese politicians have said it could take three years for exports to reach the levels they were at before the global economic crisis began.

There is much discussion of the pressure China is under from the US and others over its currency policy.

Its critics say it keeps the value of the yuan artificially low.

The trade deficit in March could help to ease that pressure slightly, although China still exported more than it imported from the US and the EU last month.

And in the months to come, the Chinese government expects that its international trade account will show a surplus again, as markets elsewhere recover their appetite for Chinese-made goods.

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