China recorded its first trade deficit in three years in February as imports in the world’s second largest economy surged.
The balance of trade moved into a $9.15bn deficit during the month, according to China’s General Administration of Customs.
Dollar-denominated imports jumped by almost 40 per cent year-on-year, to reach $129bn, more than doubling the rise in the prior month.
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.
She said: “While import growth is likely to remain in positive territory over coming months, we would also expect to see exports improve on the back of firmer global demand. And so, we would also strongly expect the trade balance to return to surplus.”
The unexpected deficit comes at a time when international trade has become increasingly politicised.
During the election campaign last year US President Donald Trump identified reducing the trade deficit with China as a vital part of his economic policies.
Trump promised protectionist policies to stop manufacturing jobs being located in China rather than the US.
The US yesterday announced a $30.2bn trade deficit with China, by far the largest with any individual country. However, this deficit could reduce as China’s economic structure changes.
Kit Juckes, global strategist at Societe Generale, said China’s trade balance is in a longer-term “deteriorating trend”. China’s growth model is becoming increasingly mature as its economy gradually moves towards developed market status.
The Chinese government on Sunday announced its lowest growth target for more than two decades, at around 6.5 per cent.