Beijing announces worst trade deficit in 22 years
Beijing (AsiaNews/Agencies) - China has reported its biggest trade deficit in 22 years last month. The deficit was US$ 31.5 billion, four times the previous largest deficit. Imports rose 39.6 per cent from a year earlier but exports increased 18.4 per cent. Combined with a slump in retail sales, the data show that China too is feeling the pinch of the world's troubled economy.
China's economy is export-oriented but because of the economic crisis in the European Union and the United States, demand for Chinese goods is down. Analysts believe Beijing to stoke domestic demand by improving wages and purchasing power.
Last week, Chinese Premier Wen Jiabao announced an economic growth target of 7.5 per cent for 2012, the lowest since 2004. He said that inflation was set at 4 per cent. In fact, consumer prices have risen much more, especially for food, which hikes ranging between 16 and 25 per cent.
In order to cut the deficit and improve exports, the People's Bank of China allowed the yuan to fall 0.5 per cent this year after a 4.7 per cent advance in 2011.
China's higher trade deficit is largely due to rising oil prices, which hit US$ 125 today. At the same time, many Chinese companies are stockpiling fuel to protect themselves from future price rises.
According to trade figures released over the weekend, crude oil shipments hit a record-high of 5.95 million barrels a day. China's imports of copper and iron ore also rose during the month.
Many economists also fear a possible real estate bubble. China's home sales declined 25 per cent in the first two months of the year.
In the past few years, real estate boomed because of easy loans and government-backed liquidity. The country now has more real estate than it needs, economist Andy Xie said. In fact, its living area per capita for over 650 million urban residents is already higher than that for Europe and Japan.
Properties under construction could house another 200 million people, equivalent to 15 years' increase in the urban population.And in Beijing and Shanghai, the average price per square metre already exceeds five months of average salary.
According to recent estimates, at least 50 per cent of new construction lies empty and unsold. The situation is such that in order to stop speculation, the government imposed restrictions on bank loans for second or third homes.