CHINA HAS POSTED a quarterly trade deficit for the first time in seven years, with imports accounting for $1.02 billion more than exports in first three months of this year, raising questions over whether one of the world’s biggest economies might be slowing down.

Exports have been driven by the manufacturing sector in China, however demand in markets like Europe and the US been stunted by domestic economic problems in the past several years. The recent turmoil in Japan will also hit China’s export sector; Zheng Yuesheng, statistics chief of the customs administration said “as the world’s third largest economy and the biggest source of Chinese imports, Japan is set to affect part of China’s foreign trade,” the BBC reports.

Although the country posted a small trade surplus of $140 million (€96 million)  for the month of March, overall the deficit stood at $1.02 billion (€706 million) for the first quarter.

The country has been aiming for increasing domestic demand over the past number of years but some analysts believe it may take a while yet for China to be free of its reliance on exports to support growth.

Asian Development Outlook has predicted that the Chinese economy is likely to slow down, with GDP set to expand to 9.6 per cent this year and 9.2 per cent in 2012 – compared to 10.3 per cent last year. Business China reports that the People’s Bank of China believes that further monetary tightening will be needed as the liquidity in the country’s financial market remains excessive.