China sees first trade deficit in February amidst rare import boom

China reported a monthly trade deficit in February, the first in recent history, following a rare surge in imports amidst a construction boom and a simultaneous fall in the growth of the countries overseas sales.

China's imports of basic goods, including iron ore, copper, crude oil and coal, rose more than 44.7 per cent in yuan terms compared to a year earlier, while its exports rose by a mere 4.2 per cent, official data showed on Wednesday.

China, the second largest economy, also reported a trade deficit of 60.63 billion yuan ($8.79 billion) for the month, figures released by the General Administration of Customs showed.

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

Analysts attribute the surge in imports in February to the distortions around the Chinese Lunar New Year and strong domestic demand.

Exports from Asia's largest economy had grown at a faster rate of 15.9 per cent in the month before while its Imports had expanded at a faster rate of 25.2 per cent in January.

For January and February combined, China's exports had increased by 11 per cent and imports by 34.1 per cent, Julian Evans-Pritchard, China economist at Capital Economics, said.

According to Pitchard, the jump in imports is a reflection of both a surge in commodity prices and strong Chinese domestic demand.

He expects China's first-quarter economic growth to accelerate to 7 per cent year-on-year, from 6.8 per cent in the previous quarter.

The report by Capital Economist says that with strong external demand expected during the coming quarters, the current pace of import growth is unlikely to be sustained.

Also, with growth in China currently running above trend and both monetary and fiscal policy being tightened, Pitchard expects a slowdown in China's domestic demand that could further dampen imports.