China had its first monthly trade deficit in three years in February, as strong demand for Chinese goods both internally and around the world led to higher imports of raw materials. Overall foreign trade was stable in year-on-year terms, while declining from the previous month.
The country’s imports surged by 44.7 percent year-on-year in February in yuan-denominated terms, while exports rose only by 4.2 percent, official data showed on Wednesday.
This led to a monthly trade deficit of 60.36 billion yuan ($8.74 billion), after a surplus of more than 354.5 billion yuan in January, according to the General Administration of Customs.
The last trade deficit was in February 2014. Currency fluctuations, higher commodity prices and the Lunar New Year holiday also may have contributed to the unusual result.
“In addition to the fact that enterprises stop exporting during holidays, the major reason for the deficit is that China is buying more commodities from overseas at surging prices,” said Zhang Yongjun, a researcher at the China Center for International Economic Exchanges. He said the deficit is unlikely to persist.
China’s commodity imports, including iron ore, copper, crude oil and coal, continued to grow in the first two months of this year and generally saw an increase in prices. The country bought 175 million metric tons of iron ore and 65.8 million tons of crude oil from global markets in the two-month period of January and February, up by 12.6 percent and 12.5 percent year-on-year respectively.
The average prices per ton for these two commodities were 532 yuan and 2,673 yuan, jumping 83.7 percent and 60.5 percent from the same period a year earlier.
“To a large extent, growing overseas demand for Chinese products such as manufacturing machinery and electronic equipment, as well as domestic infrastructure projects, boosted the country’s imports of raw material and commodities,” said Li Gang, vice-president of the Chinese Academy of International Trade and Economic Cooperation in Beijing.
This year, the country will invest 800 billion yuan in railway construction and 1.8 trillion yuan in road and water transportation, according to the Government Work Report delivered on Sunday. The government also will allocate more financial resources to support grand projects in water conservancy, railway vehicle manufacturing, telecommunications infrastructure and civil aviation.
Yu Guangzhou, the customs minister, said China’s foreign trade is on the right track since the market demand from many countries is growing and domestic demand is rising and diversifying.
“Rising demand from overseas markets, high-tech product trading, the Belt and Road Initiative and growing confidence in the country’s trade will build a solid foundation for China’s foreign trade in 2017,” Yu said.
The European Union remained China’s top trade partner in the first two months of 2017, followed by the United States, the Association of Southeast Asian Nations and Japan.
China’s shipments to the United States rose by 11.5 percent in February in yuan terms compared with a year earlier.