Trade surplus plummets, exports dive

( chinadaily.com.cn/Agencies )
Updated: 2008-03-11 09:48

China's trade surplus shrank drastically in February as sales of goods to the United States plummeted, its customs said, but some predict exports should bounce back a little bit now that winter storms have passed.

The 63 percent drop in the trade gap from a year earlier was due partly to a long-term slowdown in export demand, but February was an unusually weak month, analysts said.

"We expect the export figures to rebound in March, but continue to anticipate a more moderate slowdown in export over the course of the year," Jing Ulrich, JP Morgan's chairwoman of China equities, said in a report to clients.

February's trade surplus was $8.6 billion, sharply down from $23.7 billion in the year-earlier period, according to China's customs bureau.

The data reflected slowing growth in exports to the United States and Europe while China's still-robust economy is driving demand for imported energy, consumer goods and industrial equipment.

China's imports in February surged 35 percent to $78.8 billion from the year-earlier period, according to the customs agency. The rate of export growth, meanwhile, plunged to 6.5 percent from January's 26 percent. Exports to the United States fell 5 percent in February to $16.4 billion, while imports of American goods jumped 33 percent to $6.1 billion.

Beijing is prodding domestic consumers to spend more in hopes of reducing reliance on exports and industrial investment to drive its rapid economic growth.

Some analysts say narrowing the trade gap could help China restrain pressure for prices to rise by stanching the flood of cash coursing through the economy.

Consumer inflation rose to 7.1 percent in January, its highest level in 11 years, and is expected to surpass that when figures for February are reported soon.

Chinese Premier Wen Jiabao said last week that Beijing would pursue a more flexible exchange rate. The yuan has been allowed to rise by 16 percent against the US dollar since mid-2005, and a faster increase would help to narrow the trade gap by making China's goods more expensive abroad.

But concern over possible job losses has prompted some Beijing officials to argue against letting the yuan strengthen faster.