China Trade Deficit
JP Morgan (NYSE:JPM) economist and chairman of China Equities and Commodities, Jing Ulrich, said in a research note that even though China just experienced its first monthly trade deficit in six years in March, fixed asset investment on the domestic will decline, and that will bring things back into balance.
Assuming developed economies start to rebound in 2010, that should result in growing exports for China as well, bringing back a trade surplus to them.
Concerning floating the renminbi, Ulrich said, "The pace of China's export recovery and dynamics of imported inflation will shape the country's approach towards currency valuation. A return to the policy of gradual RMB appreciation would allow China to mitigate imported inflation and promote domestic consumption by boosting household purchasing power in local currency terms."
The March Chinese trade deficit was a reported $7.24 billion.
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