China reported its biggest trade deficit since at least 1989 in February as Europe’s debt crisis crimped exports and imports rebounded after a weeklong holiday.
The shortfall was $31.5 billion, the customs bureau said on its website today. Imports rose 39.6 percent from a year earlier, after a 15.3 percent slump in January, while exports increased 18.4 percent, the bureau said. Data in the first two months are distorted by the timing of the Lunar New Year holiday, which fell in January this year and February in 2011.
Today’s data, along with lower-than-forecast expansion in industrial output and retail sales reported yesterday, raise the odds PremierWen Jiabao will ease policies to support growth in the world’s second-biggest economy. Commerce Minister Chen Deming’s warning this week that boosting trade by 10 percent this year will require “arduous efforts” may also signal a slower pace of yuan gains as policy makers seek to aid exporters.
“Easing inflation and weakening economic activity send a strong signal for further loosening in the upcoming months,” said Shen Jianguang, Hong Kong-based chief greater China economist for Mizuho Securities Asia Ltd. who previously worked for the International Monetary Fund andEuropean Central Bank.
The government is likely to cut banks’ required reserves in March, the third reduction in four months, while appreciation in the yuan will be “difficult,” Shen said... read more.
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