China posts biggest trade deficit in decade

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China has posted a trade deficit of $31.5 billion in February 2012, the biggest in at least a decade as imports increased faster than exports.

Exports expanded by 18.4 per cent year on year to $114.4 billion in February, recovering from the retreat of 0.5 per cent in January, while imports surged by 39.6 per cent to $145.9 billion, rebounding from a slump of 15 per cent in January.

Taking seasonal factors into consideration, export and import growth in February should be 4 per cent and 9.4 per cent respectively, the General Administration of Customs said in a report Saturday.

The results were welcomed by economists after China on Friday reported a slowdown in other key economic data, including industrial production, fixed-asset investment and retail sales in the first two months, the Shanghai Daily reported.

"Trade performed better than expected and thus eased pressure for the government to release growth-supportive policies," said Xue Jun, an analyst at CITIC Securities Co.

"If exports can continue such growth momentum, it may delay cuts in the reserve requirement ratio," said Xue.

Li Maoyu, an analyst at Changjiang Securities Co, said such a big trade deficit may also slow the appreciation of the yuan.

"It's not rare for China to report a trade deficit in February but it's very uncommon for the country to register such a large trade deficit," the daily quoted Li as saying.

"It will weaken claims by some other countries that the value of the yuan gives Chinese export firms an unfair advantage," he added.

China may 'appropriately' widen the yuan's trading band to better reflect market supply and demand, said Zhou Xiaochuan, governor of the People's Bank of China, the country's central bank, during the annual session of the National People's Congress this month.

In the first two months, China's trade expanded by 7.3 per cent from a year earlier to $533 billion with a deficit of $4.2 billion.

Trade with the debt-stricken European Union (EU) improved by an annualised growth of 4.7 per cent between January and February, and deals with the US increased by 9.2 per cent. Both were negative in January, the Customs data showed.

China's trade with emerging markets improved as shipments to Russia surged by 31.9 per cent in the first two months.