China Could Post First Trade Deficit In Two Decades In 2012 As Demand Slumps In Europe, U.S.

With the decrease in manufacturing activity and exports, some economic analysts are predicting that in 2012 China will face a deficit for the first time in two decades despite the government’s recent attempts to balance out the economy. Reuters reports:

The People’s Bank of China has loosened credit conditions recently to help small firms and promised to “fine-tune” policy if needed to support economic growth, which slowed in the third quarter to 9.1 percent, its weakest in more than two years.

China’s commerce ministry warned last week that the outlook for exports could be grim for the rest of this year and the early part of next, as Europestruggles to contain its debt crisis and the United States seeks to spur its fragile recovery.

China’s imports surged 28.7 percent in October while exports grew at 15.9 percent, their slowest rate in months, suggesting Beijing’s efforts to tilt the economy toward domestic demand may be offsetting the external weakness that has dragged on economic growth this year. That capped October’s trade surplus at $17 billion.

See also: CDT Money: Indicators: Slowdown via CDT.


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