China has biggest trade deficit for 20 years
China has recorded its largest trade deficit in more than two decades as Europe's sovereign debt crisis subdued exports and oil imports rocketed.
The country's customs bureau said the shortfall was $31.5bn (£20bn), thought to be its biggest since at least 1989. Imports rose 39.6pc from a year earlier, after a 15.3pc slump in January, while exports increased 18.4pc.
Analysts had expected a deficit as imports rebounded from temporary disruption after the unusually early Lunar New Year in January, but they had predicted a greater rise in exports and a smaller increase in imports.
Efforts by Chinese companies to sell to the West have been hampered by the effects of the eurozone debt crisis and an anaemic economic recovery in the United States, although shipments to the US climbed 22.6pc from a year earlier to $19.4bn.
Overseas sales to the European Union rose 2.2pc to $19.4bn after a 3.2pc drop in January. Illustrating the increasing importance of trading with emerging markets, during the first two months of the year trade volumes with Russia jumped 31.9pc to $13.51bn.
Imports of copper by China last month were the second-highest on record, while net crude oil imports increased to a record to meet rising demand as farmers prepare for the planting season and the government adds to emergency stockpiles.
"Overall, economic conditions are getting weaker at a fast pace," said Zhiwei Zhang, a Nomura economist. "The slowdown is happening faster than the government expected."
There is speculation that China's moderating inflation and growth will lead the Government to loosen policy. Citigroup believes a cut in banks' reserve requirements may come as soon as this month.
"We would suggest that the inflation bubble in China last year is well and truly burst, and the policy easing can accelerate," said Gerard Lane, equity strategist at Shore Capital.
"This would be beneficial for the likes of miners and other emerging market related stocks.”
Song Yu, an economist at Goldman Sachs, suggested that the nation will still see a sizeable trade surplus for the full year as the deficit in early 2012 is largely seasonal.
Data in January and February was distorted by the timing of the New Year holiday, which fell in January this year and February last year.