NEW YORK (CNNMoney) — For the first time in seven years, China reported a quarterly trade deficit, as imports soared to an all-time high.
Imports outweighed exports by $1.02 billion in the first three months of the year, China’s government said Sunday. That’s a stark contrast to the country’s $13.01 billion surplus in the same period a year ago.
China’s General Administration of Customs attributed the trade gap to rapid domestic growth, surging prices for food, energy and other raw materials, and a long vacation during Chinese New Year in February.
In March, Chinese exports outweighed imports by $140 million. That slight trade surplus comes after the country reported a $7.3 billion trade deficit in February, when exports were limited by the Chinese New Year.
Exports surged 35.8% over the prior 12 months, to $152.2 billion in March. Imports rose at a slightly slower, albeit still very fast-paced, rate of 27.3% to $152.1 billion.
But Carl Weinberg, an economist with High Frequency Economics in Valhalla, N.Y., wrote in a report Sunday that the first quarter deficit is “meaningless.” He pointed out that the first quarter, with February and March in particular, are weak for trade.
Weinberg noted that last year, the first quarter surplus for China was the smallest, and that the surpluses were significantly larger in the final three quarters of the year.
China has been trying to combat inflation with a series of interest rate hikes. The country’s central bank raised rates last Tuesday for the fourth time in six months.
Imports soared 32.6% from a year ago, to a record high of $400.66 billion. Meanwhile exports increased 26.5%, to $399.64 billion.
China is the world’s second largest economy after the United States, but surpasses Uncle Sam as an export powerhouse.
For 11 of the past 12 months, China has exported far more goods than it imports — a sore point for the U.S., as the world’s largest economy grapples with a massive trade deficit.
Many U.S. government officials have criticized China for keeping its currency, the yuan. artificially low. A weaker yuan helps make Chinese goods exported to the U.S. cheaper.
Weinberg wrote that China may point to its deficit in the first quarter as evidence that it is no longer contributing to global trade imbalances. But he added that the U.S. and other developed nations are likely to continue calling for China to let the yuan appreciate more freely.
–CNN’s Helena Hong in Beijing contributed to this report.