Shift driven by soaring imports, commodity price rebound: experts
China recorded its first monthly trade deficit in three years last month as imports jumped in response to soaring demand after this year's Spring Festival holidays and rebounding global commodity prices, experts said on Wednesday.
They said that the nation's foreign trade will show only moderate growth in the future, as the economy is in the process of upgrading and transforming.
Yuan-denominated exports rose 4.2 percent year-on-year in February, while imports soared 44.7 percent, resulting in a trade deficit of 60.36 billion yuan (.74 billion), according to data released by General Administration of Customs of China (GACC) on Wednesday.
Total foreign trade in February reached 1.71 trillion yuan, up 21.9 percent year-on-year, the data showed. For the first two months, total trade hit 3.89 trillion yuan, up 20.6 percent from the same period last year, the GACC said.
Seasonal factors were a major cause of the trade deficit, Sang Baichuan, dean of the International Economics and Trade College of University of the International Business and Economics, told the Global Times on Wednesday.
"As usual during the Chinese Spring Festival, a seven-day holiday that ended at the beginning of February this year, business activities were almost suspended. But after that, most Chinese plants resumed work, creating soaring demand for imported raw materials," said Sang.
That's why there was a trade surplus in January but a deficit in February, Sang noted.
Also, higher global prices for such commodities are iron ore, copper and crude oil drove up import values, said Li Jian, a research fellow at the Chinese Academy of International Trade and Economic Cooperation.
For example, imports of iron ore reached 175 million tons in the first two months, up 12.6 percent year-on-year by volume. But the average import price was up 83.7 percent.
Crude oil import volume was up 12.5 percent to 65.78 million tons, but the average import price rose 60.5 percent.
On the export side, "prices of manufactured goods, which make a major contribution to China's export volume, were flat in the first two months," Li told the Global Times on Wednesday.
Li said that the first monthly trade deficit in three years doesn't mean that China has lost its position as a global leading exporter.
"The fluctuations in China's foreign trade are quite normal. China is not pursuing either a trade surplus or deficit. The country instead is looking to strike a balance between imports and exports." Li added.
However, the trade deficit comes as traditional advantages in China's exports are diminishing, especially in labor-intensive industries that are vulnerable to price fluctuations, Li said.
Exports in industries such as textile and clothing declined in the first two months. Clothing shipments totaled 143.33 billion yuan, 4.4 percent lower year-on-year, while textile exports stood at 97.99 billion yuan, 0.6 percent lower.
At the same time, new engines driving China's trade expansion have not been fully developed, as high value-added goods and advanced equipment - where demand keeps prices firm -- still rely on imports from countries like the US and Japan.
Sang said that China will remain a large trading nation with a moderate growth rate amid an economic and trade transformation. Fierce global competition will have an impact.
Sang also said that uncertainties brought about by new U.S. President Donald Trump persist despite a lack of clarity on his economic policy toward China.
However, he said, "There is still a strong mutual reliance and complementarity between China and the US in terms of economic cooperation."