The latest buzz in the international trade world has been around China’s recent quarterly trade deficit, the first in seven years. The country, an important player in the global export market, posted a $1.02 billion deficit for Q1 of this year. China’s increased demand for international products coupled with the lower demand from important markets for Chinese products were major contributing factors to the deficit. U.S. imports from China took a dive in Q1 of this year (see graph below), a typical trend after the holiday bustle. In fact, Q1 was actually up this year, in terms of TEU volume, 5% from quarter one of 2010 and up nearly 20% from quarter one of 2009. China will likely not continue this deficit in Q2, especially as Japan is expected to increase demand for Chinese made products during the recovery and reconstruction process.

Zepol has illustrated the trend of U.S. exports to China for the last three years in the chart below. The end of 2010 saw a large jump in exports to China, the top products being oil seeds and fruits, electrical machinery, and nuclear reactors. China still remains an export driven economy despite the deficit. That being said, China’s imports are certainly growing, along with the number of middle-class consumers, making future deficits possible.