BEIJING-China recorded a surprise trade deficit in February, its first since 2014, following a surge in imports after the Lunar New Year holiday and an unexpected drop in exports.
China's February exports unexpectedly fell 1.3 percent from a year earlier, but imports expanded 38.1 percent, well above economists' forecasts, customs data showed on Wednesday.
Despite an overall trade deficit in February, China still recorded a trade surplus with the USA of $10.42 billion, down from $21.42 billion a month earlier. Also the number of imports surged, while exports declined over the same period, and consequently the nation's trade balance has been pushed into a deficit of Yuan 60.36 billion. The January increase continues the trend in 2016 which posted the highest annual trade deficit in four years.
China's February trade report numbers have sent a wave of shock across the financial markets.
"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".
Zhuang Rui, an economic professor of the University of International Business and Economics, attributed the soaring imports figure to commodity price hikes.
USA exports rose six-tenths of a percent, as American companies sold more cars overseas, but US commercial aircraft sales faltered.
China's imports logged a remarkable growth in February, while exports growth eased more-than-expected reflecting weak foreign demand.
"This year, it's especially hard as calendar and base effects compound".
"Data in the first two months are affected by seasonal factors, and China's trade situation will be more clearly reflected in the figures of the first quarter and first half", Zhuang said.
China's February trade deficit is "unlikely to persist" and "indicates little change in China's trade dynamics", Betty Wang of ANZ Research said in a note. Trade with the United States, ASEAN and Japan went up by 18.9 percent, 24.2 percent and 20.1 percent, respectively.
Arrivals for the first two months of 2017 totalled 42.61 million tonnes, up a massive 48.5%.
He shares, optimistically, "With the headwind from the dollar's prior appreciation having eased and global growth picking up quite sharply, the outlook for exports is better now than it has been in some time".