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Chinas first monthly trade deficit in 3 years

Wednesday, March 8, 2017 10:02
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China reports its first monthly trade deficit in three years, after a surge in imports and a slowdown in the Lunar New year holidays  affect output.

Growing commodity prices and domestic demand are seen as the reasons pushing February’s imports up 38.1% on a year earlier.

However exports unexpectedly fell 1.3%, leading to a trade deficit of $9.2bn for the month.

February 2014 was the last time when China’s monthly imports last exceeded exports.

Analysts polled by Reuters predicted China with a monthly trade surplus of $25.8bn.


Slowdown of imports likely

China’s economic data from January and February can be misleading by the long holidays, which has businesses slowing down and often cutting back operations or closing completely.

Most analysts agree to the latest data being just a blip, with a surplus inevitable once again once the impact of holidays curbs.

Julian Evans-Pritchard of Capital Economics states “As per the latest trade data, seasonal distortions aside, both exports and imports strengthened in the beginning of 2017”.

“It is always doubtful that the current pace of import growth can be sustained. It is just a matter of time before we see a slowdown in domestic demand”.


With China’s economy growing at its slowest pace in 26 years in 2016, Beijing is most likely to be heartened by the current import figures, as it looks for signs of advancement.

Leaders are pushing to rebalance the economy, cutting down reliance on state investment and exports, and growing through domestic consumption.

 At the country’s rubber-stamp parliament, Premier Li Keqiang quoted In his speech “The National People’s Congress (NPC) to cut China’s annual growth target to 6.5%.

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