China posts first monthly trade deficit in 3 years as imports soar

China posts first monthly trade deficit in 3 years as imports soar

INTERNATION NEWS- China unexpectedly posted its first trade gap in three years in February as a construction boom pushed imports much higher than expected and as increasing US protectionist rhetoric casts a spotlight on the export giant's trade position.

The upbeat import reading reinforced the growing view that economic activity in China picked up in the first two months of the year, adding to a global manufacturing revival.

That could give China's policymakers more confidence to press ahead this year with oft-delayed and painful structural reforms such as tackling a rapid build-up in debt.

"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.

The surprise monthly deficit also comes as US President Donald Trump focuses increased attention on China's large and persistent run on trade surpluses with the US and as global efforts to ward off trade protectionism face growing difficulties.

China imports surged 38.1 per cent from a year earlier, the biggest increase since February 2012, official data showed on Wednesday, while exports unexpectedly fell 1.3 per cent.

That left the country with a trade deficit of $9.15 billion for the month, the General Administration of Customs said.

Most analysts, however, attributed the rare trade gap to distortions caused by the long Lunar New Year celebrations, which began in late January this year but fell in February in 2016. Many businesses shut for a week or more and factory production and port operations can be significantly affected.

ARTICLE SOURCE – BUSIENSS STANDARD