Summary:
China has posted its first quarterly trade deficit in 7 years. A $1.02 billion deficit was run through the months of January and March. March saw a small surplus of $140 million, but Febuary had a deficit of $7.3 billion. The increased deficit is blamed on high prices of iron and oil, both of which China must import huge amounts of to maintain their growing economy. Lastyear, China averaged a $16 billion surplus each month. Foreign analyst have expressed hope that their increasing deficit will allow other countries to cut down on their own deficits with China. If high commodity price maintain themselves, China could have trouble posting a surplus.
Significance:
China has long been a huge exporter of manufactured goods, but the they have outstripped their own resources. It will be interesting to see if other countries start to leverage their need for raw materials, particularly considering China has practically no world military presence. China economy could suffer if prices stay high, and if their economy goes down, who knows what could happen.
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