China Trade Surplus At Record High; Exports Surge More Than Expected

China Trade 030915

China's trade surplus rose to a record high in February as exports surged due to the effect of the timing of the Lunar New Year, figures from the customs office showed Sunday.

The trade surplus came in at $60.6 billion in February, much more than the $6 billion expected by economists.

This was larger than the record high surplus of $60 billion recorded in January and marked a new high.

Exports rose sharply by 48.3 percent year-over-year in February, more than the 14 percent rise expected by economists. In January, exports had decreased around 3.3 percent.

"We wouldn't read too much into these headline figures," Julian Evans Pritchard, China economist at Capital Economics, said. "Trade growth is highly volatile at the start of the year due to shifts in the timing of Chinese New Year, which disrupts manufacturing activity as migrant workers return home but also leads to a preholiday rush to complete outstanding export orders."

The Lunar New Year was celebrated this year on February 18th. He also added that the strength in growth of exports is unlikely to last due to rapid trade-weighted renminbi appreciation and a weak global recovery.

Imports plunged 20.5 percent, much faster than the 10 percent drop forecast by economists. In January, imports had decreased by around 19.7 percent.

In the first two months of the year, the trade surplus was at $120.7 billion. Exports advanced around 15 percent during January to February.

The government expects foreign trade to grow around 6 percent in 2015.

"Looking ahead, we expect export growth to fall back sharply this month as the New Year effect fades and for import growth to recover somewhat," Pritchard said.

"Meanwhile, although we don't expect much stronger domestic demand, import growth should nonetheless see a gradual recovery this year as commodity prices stabilise," he added.

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