"If it's (trade deficit) caused by the exchange rate, then possibly we will have to readjust our exchange rate policy," Chen Deming told delegates at an annual international forum on the southern island of Hainan.

"If the deficit is not caused by the exchange rate of the RMB, then I don't think we need to slow down or adjust the pace of the RMB exchange rate revaluation," he said at the gathering in Boao, referring to the currency's official name of renminbi.

The Boao forum has brought together leaders in government, business and academia in Asia and other continents every year since 2001 to discuss pressing issues in the region and the rest of the world.

China posted its first quarterly trade deficit in seven years in the first three months of 2011 amid rising commodity prices, which analysts said suggested it was making progress in rebalancing its export-reliant economy.

Beijing is under growing pressure from its trade partners for a stronger currency, with its critics claiming a weak yuan gives Chinese firms an unfair advantage and exacerbates global trade imbalances.

China pledged in June to loosen its grip on its currency following intense international pressure. The value of the yuan has strengthened less than five percent since then -- not quickly enough for some of its trade partners.

Policymakers have repeatedly vowed to make the yuan exchange rate more flexible but ruled out a rapid appreciation, arguing such a move would hurt the country's vast manufacturing sector and trigger widespread job losses.

earlier related report
India's Infosys Q4 profit up, but below forecasts
Bangalore, India (AFP) April 15, 2011 - India's second-biggest outsourcer Infosys said on Friday quarterly net profit jumped nearly 14 percent but the company's shares tumbled as the figures lagged market expectations.

Consolidated net profit in the three months to March rose 13.7 percent year-on-year to 18.2 billion rupees ($408 million), Infosys Technologies said in a statement, below market forecasts of 18.8 billion rupees.

Analysts called the performance, which kicked off the quarterly corporate earnings season, disappointing and blamed it on higher costs that hit margins.

"We expect the demand environment to be normal this year for the industry," said chief executive S. Gopalakrishnan, adding the company had boosted investment "to take advantage of the opportunities we see in the market."

US and other foreign firms, drawn by India's English-speaking workforce and lower costs than in the West, have farmed out a wide range of jobs from answering bank client calls to processing insurance claims and equity analysis.

Revenues of the Nasdaq-listed company, viewed as an Indian technology bellwether, climbed 22 percent to 72.50 billion rupees in the fourth quarter of the financial year ending March 31, 2010.

Analysts had expected revenues to increase 25 percent.

Infosys shares were down 8.24 percent at 3,033.60 rupees on the Bombay Stock Exchange in early afternoon amid reports analysts might downgrade the stock after the earnings figures.

"Overall earnings were not attractive. Operating margins were affected by rising staff costs," said Sanjeev Hota, an analyst at Mumbai-based brokerage Sharekhan.

However, Motilal Ostwal Securities noted the fourth quarter was "seasonally the weakest" for the industry as clients finalise their budgets and temporarily curtail spending.

News that one of the company's key board directors, Mohandas Pai, had decided to step down also undermined investor sentiment.

Infosys, founded by seven entrepreneurs three decades ago with an investment of just $250, said Pai "has much bigger projects in the horizon".

"Mohan has been an early adopter and a keen anchor builder of Infosys," Infosys chairman N.R. Narayana Murthy added.

The company -- whose market guidance is generally considered conservative -- forecast revenues of between $7.13 billion and $7.25 billion in the current fiscal year, up 18-20 percent from the previous year.

It also hiked its share earnings forecast by eight to 10 percent.

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