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China may lower the reserve that banks are required to have on hand to stimulate growth.

March 11, 2012- China saw its imports increase following a week-long holiday. The increase caused the country to record its largest trade deficit in nearly 23 years last month. Exports were lower than usual because of the sovereign debt problem in Europe adding to the country’s higher deficit.

The bureau of customs for China said imports exceeded exports by over $31.5 million. Imports were up over 39.5% for the same month the previous year following a drop of over 15% in January. Data is skewed this year due to the annual Lunar New Year that took place last year in February and this year in January.

Analysts believe the latest report along with inflation being lower than anticipated, will increase the possibility the Chinese government will ease internal policies to increase growth.

Analysts said that starting in March, the government most likely will lower the required reserves banks must maintain. If that happens, it will be the third such reduction in just four months.

China helped to weaken its currency against the U.S. dollar since the beginning of the year to help exporters, as the debt crisis across Europe hurt the region’s economy and growth.

The recently reported deficit was the country’s first in over a year. The previously highest deficit since 1989 took place in 2005 and was $7.87 billion.

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