China - trade deficit and rapid growth

I have a new article in Shanghai Daily analysing China’s 1st quarter trade deficit. It points out:

‘The significance of the announcement that China ran a trade deficit in the first three months of this year is not a single quarter’s figures. China’s trade balance is usually stronger in the second half of a year, and China will certainly run a surplus for 2011 as a whole. The significance is in the clear and strongly falling trend of China’s surplus….

‘Although China’s trade surplus has been falling, its economic growth has not declined. China’s economy grew last year by 10.3 per cent – above the 9.9 per cent average sustained since its economic reform started in 1978… The new trade data therefore confirms that China’s economy is now being driven by domestic demand and will continue to expand rapidly.’

The article with the full analysis can be found here.

The print edition of the article also carries a chart showing the declining trend in China’s trade surplus in the 1st quarter during the last three years. This data is shown in the chart below.

The strong decline in China’s trade surplus confirms the analysis that this blog has been making for the last two years.

John Ross is currently Visiting Professor at Antai College of Economics and Management,Shanghai Jiao Tong University, where he leads research on globalisation and on China and the international financial crisis.
Check out his blog: http://ablog.typepad.com/keytrendsinglobalisation/ , or follow him on twitter @JohnRoss43

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