China sees first trade deficit in three years on import rise

Chinese workers sort coal at a mine in Shanxi province. Coal imports tumbled to the lowest in nine months as demand weakened following the peak winter heating season. However, demand for commodities from iron ore to crude oil remains strong, resultin
Chinese workers sort coal at a mine in Shanxi province. Coal imports tumbled to the lowest in nine months as demand weakened following the peak winter heating season. However, demand for commodities from iron ore to crude oil remains strong, resulting in a surge in imports.PHOTO: AGENCE FRANCE-PRESSE

BEIJING • China posted its first monthly trade deficit in three years last month as imports surged at their fastest pace since early 2012, driven by strong demand for commodities from iron ore to crude oil.

Last month, China's exports unexpectedly fell 1.3 per cent from a year earlier, but imports grew 38.1 per cent, Customs data showed yesterday.

That left the nation with a trade deficit of US$9.15 billion (S$12.9 billion) for the month, the General Administration of Customs said.

But China watchers have cautioned that trends in January and February can be distorted by the long Chinese New Year holidays, with business slowing down weeks ahead of time and many firms scaling back operations or closing.

The holiday began in late January this year and in February last year.

Leaders will likely take heart from the import figures as they look to reconfigure the economy from one driven by exports and state investment to one based on domestic consumption.

The figures follow upbeat reports on fourth-quarter growth and factory activity last month.

"The latest trade data suggests that, seasonal distortions aside, both exports and imports strengthened at the start of 2017," Mr Julian Evans-Pritchard, a China economist at Capital Economics in Singapore, wrote in a note.

Surging imports reflect rising commodity prices and external demand will probably remain fairly strong in coming quarters and continue supporting shipments, he said.

Trade surplus with the United States narrowed to US$10.42 billion, the least in three years, data showed, while crude oil imports increased after the government granted import quotas allowing independent refiners to make overseas purchases.

Coal imports tumbled to the lowest in nine months as demand weakened following the peak winter heating season.

Market demand, especially domestic demand, is increasing significantly, General Administration of Customs head Yu Guangzhou told reporters yesterday.

"Getting a clear read on China's trade at the start of the year is tough," Bloomberg Intelligence economists Tom Orlik and Fielding Chen wrote in a report.

"This year, it's especially difficult as calendar and base effects compound. That said, the early signs are positive, with exports registering solid growth and imports way up."

BLOOMBERG, REUTERS

A version of this article appeared in the print edition of The Straits Times on March 09, 2017, with the headline 'China sees first trade deficit in three years on import rise'. Print Edition | Subscribe