China’s February trade report has stunned financial markets.

Imports surged while export growth slowed, leading to a shock trade deficit being recorded.

According to China’s General Administration of Customs, yuan-denominated imports jumped by 44.7% from the levels of a year earlier, easily surpassing the 25.2% growth of January and forecasts for a smaller increase of 23.1%.

Truly enormous, and no doubt impacted by booming commodity prices and a weaker yuan over the past year.

Distortions created by the timing of the Lunar New year — often a feature in the trade figures and other Chinese economic data at this time of year — almost certainly were another factor.

In volume terms, imports of copper, coal, iron ore and crude oil all fell from a month earlier.

340,000 tonnes of copper were imported, down from 380,000 tonnes in January, while coal imports dropped from 24.91 million tonnes to 17.68 million tonnes.

Iron ore imports totaled 83.49 million tonnes, below the 92 million tonne figure of January.

Crude oil imports also slowed, falling from 34.03 million tonnes in January to 31.78 million tonnes in February. Putting that slowdown into perspective, the monthly total was still the second-largest on record.

Adding weight to that view that seasonal distortions played a factor in February’s numbers, while imports surged, export growth slowed sharply over the same period.

Customs said that they grew by 4.2% from a year earlier, well below the 15.9% pace of January and expectations for a smaller rise of 14.6%.

As a result of this highly-divergent performance, the nation’s trade balance swung back to deficit, coming in at CNY 60.36 billion.

That was just a smidge away from the CNY 172.5 billion surplus that had been expected.

Chinese Customs are due to release USD-denominated figures shortly.

More to follow…

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