Rising oil imports from the Middle East have helped to push China into its first trade deficit in six years. Chinese authorities said the value of the country's imports exceeded exports by US$7.24 billion (Dh26.59bn) last month. The deficit was due to China's growing appetite for oil, raw materials and cars, the country's general administration of customs said.
China imported 217.8 million tonnes of oil in 2008, according to British Petroleum figures. Of that amount, 92 million tonnes came from the Middle East, representing about 42 per cent of China's total oil imports. China consumed 375.7 million tonnes of oil in 2008, including imports and domestic sources, a report from BP said. Despite growing imports of oil and other raw materials crucial to an economy the IMF projects will expand at a rate of 10 per cent this year, China has long been a net exporter of goods and services.
But with the development of industry and economic growth, experts say its export-driven economy is increasingly turning into one focused on domestic consumption, helping tip the balance from trade surpluses to deficits and possibly leading to more demand for oil from the Gulf. "China has so many opportunities to develop - trains that belong in the 1930s, a population that has barely travelled outside of the country, villages [that] seem to have more satellite dishes than flushing toilets," Gary Dugan, the chief investment officer at Emirates NBD, said in a note yesterday.
"Internal growth and consumption should eventually trigger a further wave of strong growth and strong stock market performance." China's internal growth and rising imports could also have an effect on its monetary policy. American officials are pushing China to remove its currency peg to the US dollar, put in place as a response to the global financial crisis. But Chinese officials have said they were wary of unwinding rescue measures, including the dollar peg, until exports showed signs of recovery.
The peg was a means of spurring exports by preventing the yuan from strengthening against the dollar. If the yuan were to become more valuable, Chinese goods would cost more for importers using dollars to buy. US exporters and government officials have also complained that an undervalued yuan gives an unfair competitive advantage to Chinese exporters. Timothy Geithner, the US Treasury secretary, recently met with Wang Qishan, the Chinese vice premier, amid growing speculation that an understanding had been reached to revalue the yuan at a higher exchange rate with the dollar.