China said Saturday its first trade deficit in six years proved the nation's exchange rate did not play a decisive role in global economic imbalances amid pressure to allow the yuan to appreciate.
International critics say Beijing has kept the currency artificially low to boost exports, resulting in massive trade surpluses with the United States and Europe. The issue has become a major sore point in Sino-US relations.
But China has defended its exchange rate policy as necessary for the survival of Chinese manufacturers and to support jobs growth.
Customs authorities announced on Saturday that the nation had posted its first trade deficit in six years in March, at 7.2 billion dollars.
Exports rose 24.3 percent to 112.1 billion dollars from the same month a year earlier, while imports soared 66 percent year-on-year to 119.3 billion dollars, they said.
Commerce minister Chen Deming had warned last month that the deficit was likely, but said it would only be a short-lived phenomenon for the nation's export-dependent economy.
And on Saturday the ministry, which is reluctant to allow a stronger yuan, was swift to respond to the figures.
"Under the situation where the yuan exchange rate was maintained basically stable, China's trade surplus continued to shrink, with a deficit occurring in March," Yao Jian, spokesman for the ministry, said in a statement.
"This again shows that in an era of economic globalisation, the deciding factor for balanced trade is not the exchange rate, but other factors such as the relationship of supply and demand in the market."
Mark Williams, London-based senior China economist at Capital Economics, said the nation's deficit "might win it some respite from pressure to do more over its exchange rate."
"But the calm won’t last. China’s trade surplus will soon reappear. Indeed, the surplus that matters most politically -- that with the US -- is already rising again and not far off a record high," he added.
Ken Peng, a Beijing-based economist for Citigroup, agreed. "It could alleviate some of the external pressure, but this is a temporary trade deficit and the yuan is not the only reason for global imbalances," he said.
Brian Jackson, senior strategist at Royal Bank of Canada, said China could still let its currency appreciate for domestic reasons, and "not to placate international pressure."
"They will want to move because it's in their own domestic interest to do so, in terms of dealing with inflationary pressures," he said.
Jackson added the deficit was partly the result of seasonal factors, as Chinese exports tend to pull back at the beginning of the year after having surged in the previous quarter ahead of the US holiday season.
"There has also been an adjustment in the yearly trade balance," he said.
"If you do a 12-month rolling sum of the trade balance, that shot up to very extreme levels from 2006 to 2008, and it started to come back down."
The financial crisis took its toll on China's exports, forcing the world's third largest economy to start adjusting its focus onto domestic demand.
Beijing has tried to play down expectations for a strong pick-up in exports this year, with commerce minister Chen saying last month that it could take up to three years to return to pre-financial crisis levels.
And China's growth has rebounded much faster than the rest of the world, which has led its imports to grow faster than its exports.
The Asian nation returned to double digit growth in the last quarter of 2009, and expanded by a total of 8.7 percent for the whole year on massive public spending and rampant bank lending.