China the second largest economy of the world after US with a GDP of 11.2 lakh crores, contributing approximately 15.5% to world GDP, is generally known for business tactics and high trade surplus in runs. Just to have an edge for its export, it has kept its currency regulated and not let it trade freely.
However to the market surprise for the month of March, China has recorded a Trade deficit, for the first since February, 2017 amid slumping export and faster pace of rise in import due to robust domestic demand.
As per the latest data released by General Administration of Customs, China trade deficit swung to $4.98billion(CNY -29.78billion) in contrary to the market expectation of Trade surplus of $19.6 billion. It was even much below the surplus of $33.7 billion of surplus recorded in the month of February.
As per the data, Export slumped by 2.7% in March post a surge of 44.5% in February on the other hand import surged by whopping 14.4% against a rise 6.8% in February. Import number even surpassed the consensus of 10% rise in import.
With Chinese reporting a trade deficit, though it was a bit of surprise for the market and global market did pare some of its gain post release of data, but market could handle itself and continued their individual pace.
But economist believes, this not very unusual, it’s a seasonal deficit.
This is not the result of trade war between US and China. Rather Trade Surplus with US has risen further to $375.227 billion, which has higher by approximately 8% from 2016’s surplus number of $347.016 billion.
Pull back in March was expected as firms stepped up the shipment in February, before the start of holidays of Chinese Lunar year. Thus this trade deficit is not a matter of worry and trade deficit may soon reach the pace of surplus in April, which will confirm trade war is not having major effect over Chinese export. Robust global and domestic demand will be enough to provide cushion against the hard blow of trade war.