The Chinese economy is the second largest in the world and it is a major exporting nation. It has frequently been accused of protectionist activities designed to restrict the penetration of imported goods into the Chinese domestic market, which is (potentially) immense. These complaints point to the trade surplus that China runs with the rest of the world as evidence of an imbalance.
The Chinese authorities have revealed the first monthly balance of trade deficit for three years for February. The deficit came in at $2.9 billion, reversing expectations of a surplus of (a very healthy) $25.8 billion. The shortfall was due to a rise in commodity prices (hitting imports) and higher domestic demand coupled with a drop in exports of 1.3%. The year-on-year hike in imports for February was a whopping 38.1%. However, February included an extended holiday period due to the Lunar New Year which will have caused output to dip. This factor leads most analysts to suggest that China’s balance of trade will return to the black when next month’s (March) data is presented.
Chinese authorities are keen to “rebalance” their economy, generating greater levels of domestic demand (mainly catered for by Chinese suppliers, of course). This would reduce the economic emphasis on exports and state investment in major infrastructure projects as drivers for expansion.
The influence of the Trump White House on Chinese economic affairs remains to be seen. As a candidate, Trump frequently (and, if we’re honest, reasonably) accused China of currency manipulation as a tool to bolster Chinese exports. If he follows through on these accusations as President, the US would be obliged to take action against China which is why previous administrations have been unwilling to make such an allegation formally. Similarly, he has suggested that he may take protectionist measures against Chinese exports (by increasing tariffs on them) unless US businesses get better access to the Chinese market.