What is a Trade Deficit?

The trade deficit is also called "trade overrun". The phenomenon that the import value of each country or region is greater than the export value in a certain period of time. Generally speaking, a country's foreign trade is at a disadvantage. ^[1]

Trade deficit

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Basic overview of the trade deficit

According to data released by the General Administration of Customs on April 10, 2010, China s foreign trade surplus in the first quarter of 2010 was US $ 14.49 billion, a decrease of nearly 80%, and a deficit of US $ 7.24 billion in March. ^[2]

On April 10, 2011, the General Administration of Customs released China's foreign trade import and export situation in the first quarter of 2011. Affected by factors such as the rapid growth of the domestic economy, the substantial increase in commodity prices in the international market, and the Spring Festival holiday, China's trade deficit totaled US $ 1.02 billion in the first quarter of 2011, compared with a surplus of US $ 13.91 billion in the first quarter of 2010.

Trade deficit data show

In the first quarter of 2010, the total value of China's foreign trade imports and exports was US $ 617.85 billion, an increase of 44.1% over the same period in 2009. Of which exports were US $ 316.17 billion, an increase of 28.7%; imports were US $ 301.68 billion, an increase of 64.6%.

Statistics show that in March 2010, China's total value of imports and exports was 231.46 billion US dollars, an increase of 42.8%. Of which exports were US $ 112.11 billion, an increase of 24.3%; imports were US $ 119.35 billion, an increase of 66%.

According to customs statistics, in the first quarter, China's foreign trade showed a good momentum of restorative growth. Compared with the first quarter of 2008, the total value of imports and exports in the first quarter of 2010 increased by 8.2%; exports increased by 3.4%, and imports increased by 13.8%. Among them, the total value of imports and exports in March 2010 increased by 13.1% over the same period in 2008; exports increased by 2.9% and imports increased by 24.6%. From a month-on-month basis, imports and exports in March 2010 increased by 27.6% month-on-month; February exports increased by 18.6% month-on-month and imports increased by 37.3% month-on-month.

According to customs statistics, in the first three months, the growth rate of general trade imports and exports was higher than the overall growth rate of the same period, and processing trade imports increased rapidly. China's general trade imports and exports were 309.68 billion US dollars, an increase of 47.9%, which was 3.8 percentage points higher than the national import and export growth rate during the same period. Among them, exports were US $ 141.31 billion, an increase of 26.6%; imports were US $ 168.37 billion, an increase of 72.2%. A general trade deficit of US $ 27.06 billion occurred. During the same period, China's import and export of processing trade was US $ 240.51 billion, an increase of 38.5%. Among them, exports were US $ 151.69 billion, an increase of 29.8%; imports were US $ 88.82 billion, an increase of 56.3%. The trade surplus under processing trade was US $ 62.87 billion, an increase of 4.7%, equivalent to 4.3 times the size of the overall surplus during the same period.

In the bilateral trade between China and our main trading partners, in the first quarter of 2010, the EU continued to maintain China's largest trading partner. The total value of bilateral trade between China and the EU was US $ 101.47 billion, an increase of 35.1%. During the same period, the United States remained China's second largest trading partner, with a total bilateral trade value of US $ 78.11 billion, an increase of 25.8%. Japan surpassed ASEAN with a slight advantage and became China's third largest partner again. The total value of China-Japan bilateral trade in the first quarter was US $ 63.61 billion, an increase of 38.2%. The total value of bilateral trade between China and ASEAN reached US $ 62.91 billion, an increase of 61.3%.

Among export commodities, in the first quarter of 2010, China s exports of mechanical and electrical products reached US $ 189.08 billion, an increase of 31.5%.

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During the same period, China s overall export growth rate was 2.8 percentage points, accounting for 59.8% of China s total export value during the same period. During the same period, exports of traditional bulk commodities increased rapidly, of which apparel exports were US $ 24.04 billion, an increase of 9.1%; textile exports were US $ 15.21 billion, an increase of 26.6%; footwear exports were US $ 7.26 billion, an increase of 13.8%.

Among imported commodities, the import volume of major commodities has increased to varying degrees, and the average import price has generally rebounded significantly. According to customs statistics, iron ore imports were 160 million tons, an increase of 18%. The average import price was 96.3 US dollars per ton, an increase of 20.7%; soybean imports were 11.04 million tons, an increase of 8.7%. %. In addition, the import of electromechanical products was US $ 137.76 billion, an increase of 49.8%, of which the import of automobiles was 179,000, an increase of 1.7 times.

Cause Analysis

Due to the strong domestic demand, both the quantity and price of petroleum and other raw material imports have risen strongly, and the import of automobile products has surged due to the upgrading of the domestic consumption structure. In March, China s import growth rate was 41.7 percentage points higher than the export growth rate in the same period, and 7.24 billion yuan appeared in the month. The trade deficit of the US dollar has suspended China's trade surplus for 70 consecutive months since May 2004. Among them, the deficit in March came mainly from countries and regions such as Taiwan, Japan and South Korea, with a scale of 7.9 billion, 6.53 billion and 6.13 billion US dollars respectively.

Trade deficit expert review

Zhou Shijian said that the United States' request for the yuan to appreciate faster and more 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 German currency's "snake-shaped floating" experience to achieve narrow fluctuations, which would have less adverse impact on China's economy and exports.

Customs analysis shows that the rapid growth of the domestic economy, the sharp rise in commodity prices in the international market, and the Spring Festival holiday are important reasons for China's trade deficit in the first quarter.

Zhou Shijian said that the first quarter is the low season for exports, and China's export season is concentrated in July to October. Therefore, the trade deficit in the first quarter cannot represent the future trend of import and export trade. As seasonal factors weaken, the trade surplus will continue, but The growth rate will narrow and gradually balance.

When Premier Wen Jiabao of Zhejiang State Council conducted an investigation on economic operation, he emphasized that with the balance of imports and exports, the focus of work should be on maintaining stable growth in foreign trade and optimizing the structure of imports and exports. It is necessary to maintain the basic stability of foreign trade policies, accelerate the transformation of foreign trade development methods, adhere to the promotion of science and technology, win by 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 increase the intensity of industrial restructuring." Zhou Shijian said that while expanding imports, export policies must remain stable and should not undergo major changes. "Exports cannot fall."

Zhang Yansheng said: "China needs to complete the transformation of economic development and foreign trade development mode, and realize the transition from a stage driven by labor, land, and environment to a scale and innovation-driven stage. Moderately increase imports of non-productive products and vigorously increase and accelerate trade. The import of foreign advanced equipment, technologies and talents required for transformation and upgrading is China's direction to optimize the import structure. At the same time, China must strengthen the export efforts of traditional export projects and emerging industries and improve the cross-border service capabilities of modern service industries. ^3]

In the first quarter of 2011, China's general trade imports and exports amounted to USD 41.792 billion, an increase of 34.8%. A general trade deficit of 45.98 billion U.S. dollars was recorded, an increase of 66.5%. In the same period, China's import and export of processing trade amounted to 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%.