China posts rare trade deficit

Imports to China surged much more than expected in February, causing the country to post a rare trade deficit.

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

Imports in yuan-denominated terms surged 44.7 per cent from a year earlier, while exports rose 4.2 per cent, official data showed on Wednesday.

That left the country with a trade deficit of 60.63 billion yuan ($A11.57 billion) for the month, the General Administration of Customs said.

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 2017.

That could give China's policymakers more confidence to press ahead with oft-delayed 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 seven per cent year-on-year, from 6.8 per cent in the last quarter, economists at OCBC wrote in a note on Monday, while adding the pace might 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."

But he added it was unlikely the current pace of import growth could be sustained as the impact of higher commodity prices started to drop out of the calculations in coming months.


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Source: AAP



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