U.S. trade deficit drops in February
A drop in U.S. imports from China and elsewhere helped narrow the trade deficit in February, though analysts said the drop might signal that the economy is slowing.
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The monthly trade shortfall with China fell sharply, to $18.8 billion from $23.3 billion the month before. That was largely because of a decline in U.S. imports. Exports to China rose slightly.
Trade and other data are being watched closely for evidence that trade patterns in the two countries are becoming more balanced. China posted its first quarterly trade deficit in seven years in the first three months of 2011, though that was largely driven by higher commodity prices.
The U.S. data for February are disappointing for the Obama administration’s effort to boost American exports. U.S. sales abroad in February fell $2.4 billion to $165 billion.
China’s surprise trade deficit for the first three months of the year — its first quarterly trade shortfall since 2004 — might spell a windfall in many places around the world. What’s less clear is what it means for the United States, the nation where China’s trade dominance has been most politically charged and where politicians have argued most pointedly for more balanced ties.
The new data on China were dismissed by some analysts as a seasonal anomaly and cited by others as evidence that the nation might be developing more even trade relationships with the rest of the world as a whole. But there was little suggestion of a boon for the United States.
Farmers are selling more grain, but the Chinese economy remains restricted for U.S. service and financial firms. “I don’t think the manufacturing side will benefit that much” from a surge in imports, said Shen Jianguang, a Hong Kong-based economist at Mizuho Securities Asia.
The Chinese deficit for the three months that ended in March was small — about $1 billion — and was driven by higher prices for oil, food and other commodities.
China’s trade balance is typically at its narrowest at the start of the year, analysts said, and seasonal patterns associated with the Lunar New Year celebrations in February also make it difficult to attach much significance to the number.
The International Monetary Fund said Monday that it expects China’s current account — a broader measure of its economic relations with the rest of the world — to widen over the next two years to an amount equal to more than 6 percent of the country’s economy. That is short of the levels seen at the height of the boom but beyond what some consider sustainable. The United States also has pressed the country to move more quickly on social and other policies that could boost local spending, causing an increase in Chinese imports. And China has faced U.S. pressure to allow its currency to rise more freely on world markets.
But as a global recovery has taken hold, officials in the United States and at organizations such as the IMF have argued that it would be unhealthy for the world economy if China’s overall trade surplus grew back to and beyond the records set at the peak of the boom in 2008.
From that perspective, even a small deficit might be evidence that China’s dependence on exports might be shifting as rising wages and commodity prices and a slowly appreciating currency hike up prices and imports.
The shortfall will give China ammunition in discussions in Washington this week about global economic issues that often revolve around its emerging role in the world economy. Although the country will run a substantial trade surplus for the year, it is expected by many to narrow from about $180 billion last year to perhaps $150 billion or less in 2011.
schneiderh@washpost.com
