China registers trade deficit

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China unexpectedly posted a trade deficit for the first time in more than six years as it stored crude oil ahead of a possible war on Iraq and consumers took advantage of tariff cuts to buy more imported cars.

The deficit in January was US$1.25 billion, the first time the nation has posted a shortfall since December 1996, Xinhua news agency said, citing Customs statistics. Imports rose 63 percent to US$31 billion, driven by a 78 percent increase in the volume of oil imported. Exports rose 37 percent to US$29.8 billion.

General motors Corp. and other carmakers took advantage of China's entry into the World Trade Organization to import more cars into the country and also to increase production at plants assembling parts shipped from overseas.

"It is surprising," said Robert Subbaraman, an economist at Lehman Brothers in Tokyo. "My suspicion is there were temporary factors involved. Oil prices have been going up so China might be trying to front load their imports."

As china imported greater quantities of oil, prices rose. The price of crude in New York has risen 73 percent in the past year on concern an Iraq war may disrupt supplies from the Middle East. A workers' strike in Venezuela also reduced output from the world's fifth largest exporter of the fuel.

Crude could extend its gains because of the "war jitters" and increased concern about supplies in the U.S. after inventories last week fell to the lowest since 1975, said Gordon Kwan, an oil and gas analyst with HSBC Securities in Hong Kong.

China will build a 20-million-ton strategic oil reserve to protect itself from a war in Iraq and other conflicts that may disrupt supply from the Middle East, the government said last month. The country plans to stockpile about 149 million barrels, enough to meet oil demand for one month, said Song Chaoyi, a deputy director at the State Development Planning Commission.

As china's economy expands at the fastest pace of any major Asian nation, incomes are rising, increasing the affordability of foreign cars, wines and other goods. At the same time, the local prices of these pro-ducts are falling as tariffs fall following China's entry into the WTO.

Car imports rose more than three-quarters to 127,394 units last year after the country increased its vehicle quotas as part of its WTO commitments. Car and auto part imports totaled US$860 million last month, two-and-a-half times what they were a year earlier, according to Xinhua. China will increase its vehicle import quota 15 percent this year to US$9.12 billion.