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Analysis Of The Reasons Behind The Current Deficit Between China And The United States

2011/3/14 16:14:00 61

Deficit Trade Deficit

 

Both the United States and China reported on Thursday.

trade deficit

It has caused market concern, but the mutual reference of the two reports should have eased the worry to a certain extent.


First of all, we must note that the two reports are aimed at different periods.

China's data are for February, while the United States releases data for January.

The US trade deficit widened in January, much of which was due to a rise of 5.1% in non oil imports.

In January, imports from China increased by 1.8% to $31 billion 350 million.


To a certain extent,

Imported

Growth is good news because it reflects an increase in domestic demand, but it also makes people worry that GDP will begin to be dragged down by foreign trade.


But China's February data show that the surge in US imports may be affected by seasonal factors.

China's export growth slowed in February, and economists warned that the Spring Festival holiday may play a role in it.

This can be seen in US data: the United States imported from China in January, partly reflecting the busy schedule of pre holiday delivery.

Morgan, a Chinese economist at Morgan Stanley, points out that in the first two months of this year, China's exports increased by 21% over the same period last year.


Together with the two reports, we can see that the market may be overly concerned about the expansion of the US deficit or the slowdown in China's economic growth.

But there is also a cause for concern.


Although the United States in January

trade deficit

It was not driven by the rise in oil prices, but oil prices rose even more in February, which can be seen from Chinese data.

Sustained high energy prices may be a drag on the two countries' foreign trade in the coming months.

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