China warned yesterday its export-dependent economy is expected to experience a trade deficit in March – the first for a single month in six years.
The announcement followed predictions by analysts of a slump in shipments by the world's biggest exporter compared with February, when factories cranked up production for April's Easter holiday.
Commerce Minister Chen Deming's remarks to the closed-door China Development Forum in Beijing were published by the state Xinhua news agency and People's Daily newspaper amid growing pressure for the yuan to appreciate.
Chen defended the nation's exchange rate policy, arguing that a stronger yuan by itself could not resolve global trade imbalances.
Beijing says the policy is necessary for the survival of Chinese manufacturers and supporting jobs growth but critics say the government has kept the currency low to boost exports, resulting in massive trade surpluses with the US and Europe.
A slowdown in shipments could be a sign that the recovery in crisis-hit markets is not yet on a firm footing, which could be a drag on China's export-dependent economy.
China last recorded a trade deficit for a single month in May 2004, official data shows. China's exports soared 45.7 per cent in February, their fastest pace in three years, continuing a rebound that started in December when exports grew 17.7 per cent and snapped a 13-month falling streak.
The nation's trade surplus reached $7.61 billion (Dh27.91bn) in February, up 57.2 per cent year-on-year, while imports of coal, luxury handbags, high-tech goods and other products rose 44.7 per cent year-on-year to $86.9bn.
The turnaround in exports has intensified pressure on Beijing to let the yuan – effectively pegged to the US dollar since mid-2008 – appreciate.
But China has tried to play down expectations for a strong pick-up in exports this year, with Chen saying early this month that it could take up to three years to return to pre-financial crisis levels.