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China Posts Massive Trade Deficit
BEIJINGChina swung to a massive trade deficit in February, due partly to seasonal distortions but also to faltering demand for the country's exports.
The weak export performance comes on top of a raft of disappointing economic data on Friday that economists said will add to the likelihood of additional easing by the central bank and other policy makers.
"Overall, economic conditions are getting weaker at a fast pace," said Nomura economist Zhiwei Zhang. "The slowdown is happening faster than the government expected."
China posted a trade deficit of $31.48 billion in February after reporting a $27.28 billion surplus in January, according to data released Saturday by the General Administration of Customs.
Economists had widely expected the trade balance to swing to a deficit, as imports recovered from a temporary disruption during the Lunar New Year holiday in January. But the size of February's deficit is well beyond the range of analyst estimates.
It is the largest monthly deficit in Dow Jones data dating back to 2000, when the overall economy was much smaller, and likely the largest ever.
Economists polled earlier by Dow Jones had a median forecast of an $8.5 billion deficit. The biggest deficit forecast, from Bank of America-Merrill Lynch, was $23.2 billion.
Following the poll, some analysts adjusted their estimates after Commerce Minister Chen Deming said at a press conference on Wednesday that preliminary data for the first two months of this year show that China's exports can increase by 7% in 2012
Nomura's Mr. Zhang, for instance, said he expected at $28 billion February deficit based on Mr. Chen's remarks.
Mr. Zhang said Saturday the surprisingly large deficit was due to especially weak exports, likely due to faltering demand for Chinese goods in the European Union and other markets.
Exports rose 18.4% in February from a year earlier, having fallen 0.5% in January. Economists had expected exports to rise 28.8% in February. Imports rose 39.6% from a year earlier, compared to a 15.3% decline in January. Economists had expected a 26% increase.
For January and February combined, exports rose 6.9% while imports rose 7.7%. The January-February trade deficit came to $4.25 billion, compared with a slight deficit of $890 million in the first two months of last year.
Analysts say that China is still likely to run a trade surplus for the full year. The country's manufacturers often stock up on imported supplies early in the year that are then fashioned into exports later in the year, leading to seasonal deficits early on.
The country's overall trade deficit has been shrinking for several years, leading Chinese officials and many analysts to argue that the country is rebalancing away from reliance on external demand and that the yuan is less undervalued.
On Saturday, Former Vice Commerce Minister Wei Jianguo told Dow Jones Newswires on the sidelines of the annual meeting of China's legislature that the country's foreign trade will face stiffening challenges this year.
The country's exports are likely to rise at a single-digit pace this year, he said, having risen 20.3% last year.
Liyan Qi contributed to this article.
China Posts Massive Trade Deficit - WSJ.com
