Rare trade deficit for China in February

> Imports surge 44%, far more than expected

BEIJING: China unexpectedly posted a rare trade deficit in February as imports surged far more than expected to feed a months-long construction boom, driven by commodities from iron ore and copper to crude oil and coal.

Imports in yuan-denominated terms surged 44.7% from a year earlier, while exports rose 4.2%, official data showed yesterday.

That left the country with a trade deficit of 60.63 billion yuan (RM39.1 billion) for the month, the General Administration of Customs said.

Customs has not yet published dollar-denominated trade figures, on which most economists and investors base their forecasts and analysis.

China has not posted a trade deficit in dollar terms since February 2014.

Apart from currency fluctuations, higher commodity prices and the timing of the long Lunar New year holidays early in the year also may have distorted the data.

Most of China’s commodity imports grew strongly in volume terms from a year earlier, but dipped from January.

Still, economists say the upbeat readings reinforced a growing view that economic activity in China and globally picked up in the first two months of the year.

That could give China’s policy makers more confidence to press ahead with oftdelayed and painful structural reforms such as tackling a mountain of debt.

Containing the risks from years of debt-fuelled stimulus and heavy spending has been a major focus at the annual meeting of China’s parliament which began on Sunday.

China’s first-quarter economic growth could accelerate to 7% year-onyear, from 6.8% in the last quarter, economists at OCBC wrote in a note on Monday, while adding that the pace may ease starting in spring.

“We suspect that this largely reflects the boost to import values from the recent jump in commodity price inflation, but it also suggests that domestic demand remains resilient,” Julian Evans-Pritchard at Capital Economics said in a note.

“Looking ahead, we expect external demand to remain fairly strong during the coming quarters which should continue to support exports.”– Reuters