Published: Fri, March 10, 2017
Money | By Oscar Reynolds

China surprises with 1st trade deficit since 2014

China surprises with 1st trade deficit since 2014

China's February exports unexpectedly fell 1.3 percent from a year earlier, but imports expanded 38.1 percent, well above economists' forecasts, customs data showed on Wednesday.

The numbers are in and it looks like the U.S. trade deficit shot up in January to reach its highest level in roughly five years, mostly on the heels of more success from mobile phones and other consumer goods that increased America's trade gap with China. Peter Navarro, Trump's new Director of the National Trade Council, said on Monday the reducing the United States deficit would be its top policy focus.

After declining in December, the USA trade deficit rose to a near five-year high in January amid a surge in imports, illustrating how hard it may be for President Trump to fulfill his campaign pledge to reduce America's trade gap.

Emily Nicol, an economist at Daiwa Capital Markets, warned seasonal effects around the Lunar New Year were responsible for nudging the balance of trade into deficit. China's foreign trade surplus with European Union was 130.16 billion yuan, a 12.6 percent drop year on year.

Analysts often look at January and February together to screen out the impact of the two-week Lunar New Year holiday, which begins on a different date each year.

China on Sunday trimmed its 2017 economic growth target to "around 6.5 per cent" in the midst of an array of challenges.

Imports in February surged 44.7% in yuan terms from a year earlier, compared with a 25.2% rise in January, the General Administration of Customs said. China accounted for the bulk of imports, sending $41.4 billion worth of merchandise.

American exporters have struggled over the past two years as a rising dollar has made their goods more expensive and therefore less competitive in overseas markets. Shipments of goods to China, also singled out by the Trump administration, dropped 13.4 per cent. Weak global demand is a drag on Beijing's efforts to nurture self-sustaining economic growth based on consumer spending instead of trade and investment.

"Looking ahead, we expect external demand to remain fairly strong during the coming quarters which should continue to support exports".

Like this: