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 Business News | March 2005 
U.S. Trade Deficit Hits $58.3 Billion as Chinese Imports Surge
 Elizabeth Becker - The New York Times
| As bad as the trade figures were for January, some analysts say the imbalance will grow in the near term.
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Washington - The United States trade deficit hit $58.3 billion, its second-highest level on record in January, defying predictions that a weakened dollar and lower oil prices would improve the American trade picture.
Instead, American consumers continued to buy foreign-made goods at a record pace, including cars, electronics and business equipment, helping to increase the trade deficit by 4.5 percent from $55.7 billion in December, the Commerce Department reported today.
This month's trade figures also included a surge in Chinese textile and apparel shipments, reflecting the end to global quotas and the beginning of what eventually led to China taking over as much as 70 percent of the American textile and apparel market.
The Bush administration said these trade figures should be seen as testimony to the strength of the American economy and its role as an engine of global growth.
"We view these figures as an affirmation that we're growing faster than our trading partners by as much as 2 percent and we need them to take steps so they can grow and buy our products," Rob Nichols, the spokesman for Treasury Secretary John W. Snow, said in an interview.
Representative Benjamin L. Cardin of Maryland, the ranking Democrat on the trade subcommittee of the House Ways and Means Committee, was far less sanguine. He said he would push for immediate action, beginning with implementing safeguards to limit Chinese textile goods. Those limits, initially approved by the administration, are blocked by a court injunction.
"We are obviously in a free fall here, with deficit after deficit, and it just cries out for action," Mr. Cardin said in an interview.
But China is also pushing along the global economy, spurring growth especially in Asia.
Yet while most other industrialized countries enjoy a trade surplus with China, the United States has a trade deficit of $15.3 billion with the Asian giant, the largest deficit with a single country on record. China accounted for one-fourth of the trade shortfall in January.
That imbalance has led to increasing loud charges of unfair trading practices by China, from hidden subsidies to undervaluing its currency. Those issues are rising in the political agenda as the trade deficit grows.
Representative Clay Shaw, the Republican from Florida who heads the trade subcommittee of the House Ways and Means Committee, said in an interview that he planned to hold hearings on the trading practices of China.
"China is one of my top priorities," Mr. Shaw said. "We need to be concerned about China and some of their tactics."
As bad as the trade figures were for January, some analysts say the imbalance will grow in the near term.
"Most ominously, matters should get worse because of the jump in oil prices in February," said Ashraf Laidi, the chief currency analyst at the M.G. Financial Group in New York, who predicted that next month's deficit could reach $62 billion, surpassing November's record trade gap of $59.3 billion.
Analysts had hoped that lower imported oil prices in January would help diminish the trade imbalance. The Commerce Department said the average price of imported oil was $35.35 a barrel in January, the lowest since July.
The weakened dollar had been expected to spur export growth, which it did by 0.4 percent, but not enough to offset the import growth of 1.9 percent. The dollar continued to weaken today, falling in value against the euro and other foreign currencies after the January trade deficit was announced.
Over all in January, American exports rose $400 million, to $100.8 billion, mostly because of an increase in sales of services, the Commerce Department said. But imports rose $2.9 billion, to $159.1 billion, in January, with much of the money being spent on automobiles and automobile parts, the department said. |
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