JOC 10/3/08

China's trade surplus drops

China's trade surplus shrank in February as merchandise exports to the U.S.
fell, the government said Monday. However, analysts said exports should bounce back now that winter storms that disrupted the economy have passed.

February's trade surplus was $8.6 billion, down 63 percent from $23.7 billion in the year-earlier period, according to China's customs bureau.
The decline was due partly to a long-term slowdown in export demand, but February was an unusually weak month, analysts said.

"We expect the export figures to rebound in March, but continue to anticipate a more moderate slowdown in export growth over the course of the year," Jing Ulrich, JP Morgan's chairwoman of China equities, said in a report to clients.

China's imports in February surged 35 percent to $78.8 billion from the year-earlier period, according to the customs agency. The rate of export growth plunged to 6.5 percent from January's 26 percent.

Exports to the U.S. fell 5 percent in February to $16.4 billion, while imports of U.S. goods jumped 33 percent to $6.1 billion.

The February trade gap was the smallest since March 2007, but that month's
$6.9 billion gap was considered abnormally low because of changes in export-tax policy. It has been two years since China regularly posted monthly trade surpluses under $15 billion.

The trade surplus with the 27-nation European Union, China's biggest trading partner, narrowed by 15 percent to $10 billion, according to the government data.