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China Reports Fourth Monthly Trade Deficit

China posted its fourth monthly trade deficit in a row in April as a result of the growing demand for raw materials to feed its booming economy.

The deficit totalled US$2.26 billion last month, widening from US$540 million in March, according to the Ministry of Commerce.

Exports rose 32 percent from a year earlier to US$47.1 billion and imports jumped 43 percent to US$49.4 billion.

Analysts say the deficit is mainly because of the increasing imports of raw materials such as oil, iron plates, steel, copper, iron ore and cotton.

Investment in fixed assets jumped 43 percent in the first quarter, almost double last year's growth rate.

And the drop of export tax rebates has also led to an export slowdown, said Lu Jinyong, a professor at the University of International Business and Economics in Beijing.

"Many enterprises found less profits in the exporting business without the high rebates, and decided to reduce the exports," he said.

However, China's trade deficit may ease in the coming months as government efforts to cool an investment boom curbs demand for imported machinery and commodities, analysts say.

"The central government's tight control on bank loans may be effective in the latter half of the year," Lu said.

He forecasted a minor trade imbalance for the full year.

In another development, China's foreign investment continued to grow in April.

The nation registered an actual foreign direct investment (FDI) figure of US$19.62 billion from January to April, up 10.07 percent year-on-year.

The contracted direct investment, an indicator many analysts believe reflecting future trends, achieved a growth rate of 53.96 percent, to US$47 billion.

The ministry did not provide specific data for April alone.

Based on calculations using official information, actual FDI in April was around US$5.55 billion, some US$150 million less than the previous month.

The March and April figures show that FDI is warming up, Lu said.

He also predicted a full-year FDI increase as the international investment climate improves.

But the jump will not be "very big," he said.

(China Daily May 14, 2004)

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