For the first time in seven years, China recorded a deficit in their quarterly trade report. A 1.02 billion U.S. dollar deficit marked the first time in a long time that China has been behind in international trading. Consider the fact that they had a surplus of $13.9 billion at this time a year ago. The big question for forex traders is how this will affect the Chinese economy.
With China’s immense size and population, it is easy to go into panic mode over this information. This should not be a concern, however. The Chinese economy has been fervently exporting goods for so long, the fact that imports now rank higher (at least for the last quarter), should not cause you to worry. With a more balanced trading platform like using the Forex Trader Pro, China’s economy, it can be argued, is starting to catch up to the rest of the world.
The Chinese yuan has been a major source of contention amongst politicians and trade experts. China has not allowed the yuan to rise in value in the manner that other countries find acceptable. It very well could be that China is simply using their deficit as a way to keep their currency weak in the international economy.
Why would China want a weak currency? Well, for one, a weak currency allows China to trade at a discount. It also can be a sign that Chinese officials are trying to put other nations, specifically U.S., companies at a trading disadvantage. Whatever the purpose behind the slow appreciation of the yuan, China is not in a position to start getting worried about.
