China Trade Deficit Spurs Concern (March 11, 2012) (February's Dive Into Red Raises Expectation for Stimulus to Boost Growth; Gauging Effect of Lunar New Year Holiday):

It was interesting to note that the week-long Lunar New Year holiday in January disrupted China's usual export and import flow for the first two months of the year. The New Year celebration is a huge part of the Asian culture in most Southeast Asian countries. When combining January and February, the trade deficit came to $4.25 billion, compared with a deficit of $890 million in the first two months of last year.

Like we saw last week in the blog, Premier Wen Jiabao reduced the country's growth target to 7.5% from the 8% annual target he has used since 2005.  The number is considered symbolic—China's economy routinely grows far more rapidly than the forecast but growth in gross domestic product may slip below that target in the first quarter of 2012. China hasn't had a quarter where GDP growth fell below the government's target since early 2009.

As we talked about in class, it is remarkable that the Chinese market has increased so much over recent years, and been able to sustain their crazy growth rate. These months may have been a little speed bump but as the past has shown they will probably continue growing.

~Chet Matsuura

http://online.wsj.com/article/SB10001424052702303717304577274922208015862.html?mod=WSJAsia_hpp_LEFTTopStories