China unexpectedly reported a trade deficit for March amid a surge in imports and a weaker expansion in exports, official data showed Wednesday. Separately, Fitch Ratings downgraded the country's local currency sovereign rating on Tuesday, citing surging credit growth in the country.
The General Administration of Customs said that the trade balance turned to a deficit of $884 million in March, belying expectations for a surplus of $15.15 billion. In February, the balance was in a surplus of $15.23 billion.
Exports rose 10 percent year-on-year in March, weaker than forecasts for a 11.7 percent expansion and the 21.8 percent increase witnessed in February.
On the other hand, imports rose 14.1 percent annually last month, beating forecast of 6 percent growth and reversing most of the 15.2 percent drop in the previous month.
The government targets an 8 percent growth in trade this year, which is lower than the previous year's target of 10 percent growth.
In a report on Tuesday, the Asian Development Bank said that the ongoing sluggishness in the global economy will remain a drag on Chinese exports, while further headwinds from Europe, China's largest trading partner, and the possibility of renewed inflationary pressures pose downside risks to the overall outlook.
The lender forecasts strong consumption and fiscal spending to fuel a rebound in growth in 2013, although expecting government steps to cool pressures on the environment and to narrow income gaps to limit the upside in 2014. ADB forecasts GDP growth of 8.2 percent for 2013 and 8 percent for 2014.
The economy ended seven quarters of slowdown in the fourth quarter of 2012, with the gross domestic product accelerating to 7.9 percent. Nevertheless, for the whole of 2013, growth came in at a 13-year low of 7.8 percent.
Meanwhile, Fitch downgraded China's long-term local currency rating to 'A+' from 'AA-' with a 'stable' outlook, saying that risks to China's financial stability have grown.
The rating agency noted that the country's credit has grown significantly faster than GDP since 2009. The stock of bank credit to the private sector was worth 135.7 percent of GDP at the end of 2012, according to the rating agency. Fitch affirmed China's long-term foreign currency rating at 'A+'.
Fitch also pointed out that that the indebtedness of local governments rose again in 2012, with significant additional contingent liabilities expected from debts of local government-linked corporates. The lack of transparency over the indebtedness of local governments is a shortcoming for China relative to its rated peers, the rating agency said.
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