Likely Trade Deficit Could Weaken Calls for Yuan Appreciation

A possible trade deficit in March could dampen arguments for strengthening of the yuan, reports the South China Morning Post, citing Premier Wen Jiabao.

 

Wen forecasts the trade deficit would be more than US$8 billion in March. If final data matches the prediction, this would be China's first monthly deficit since April 2004.

 

"If March's trade data does show a deficit for the month, the timing would strengthen China's hand in the international debate on the right time to resume appreciation of the RMB," Tom Orlik, an economist with research firm Stone & McCarthy in Beijing, told the Post.

 

Critics argue that the yuan was undervalued and gave Chinese exporters an edge, citing China's trade surpluses as reasons for Beijing to let the yuan appreciate, says the Post.

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