China’s $29.7 billion trade deficit its largest in a decade

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A surge in imports in February has left China with a trade deficit of $US31.5 billion ($A29.71 billion), its largest in a decade, the Xinhua news agency reports.

Despite an 18.4 per cent increase in exports – a six-month high – to $US114.5 billion, imports grew by 39.6 per cent, to $US146 billion, according to latest monthly customs data. It was the strongest import growth in 13 months.

However, the General Administration of Customs noted that the data was skewed by the Chinese New Year holiday in January, which distorted month-on-month comparisons for February.

Chinese exports were also hurt by economic weaknesses in Europe, one of its major import markets. In 2011, Europe accounted for about one-sixth of China’s exports.

It was the first time the trade balance had slipped into the red in a year.

Seasonally adjusted, the export growth rate logged in at four per cent for February, while import growth registered at 9.4 per cent.

With expectations of further economic problems abroad, expected domestic economic tightening and rising labour costs, China now expects trade to slow during the rest of 2012. The government has set a target of 10 per cent trade growth in 2012, down from 22.5 per cent growth in 2011.

Commerce Minister Chen Derning said earlier this week that such an outcome would be manageable, but would require “arduous efforts”.