China imports surge almost 40% on-year in February

China`s imports surged almost 40 percent last month, data showed Wednesday, fuelled by higher commodity prices and strong domestic demand, bolstering hopes that the world`s number two economy is getting back on track.

Leaders will likely take heart from the figures as they look to reconfigure the economy from one driven by exports and state investment to one based on domestic consumption.

The figures follow upbeat reports on fourth-quarter growth and February factory activity.

The forecast-beating 38.1 percent year-on-year import jump was almost twice as high as the 20 percent increase tipped in a Bloomberg News survey, while exports fell 1.3 percent, missing the estimated 14 percent increase.

The readings left China with a trade deficit of $9.15 billion, its first in three years, instead of the $27 billion surplus forecast by the poll. In January it posted a $51.3 billion surplus.

However, analysts said the February results were affected by the timing of the Spring Festival holiday, which causes a slowdown in activity at factories and ports.

"The deficit, in combination with the increase in China`s forex reserves revealed yesterday, also suggests that capital outflows have narrowed sharply recently," Julian Evans-Pritchard of China Economist said in a note.

As the world`s biggest trader in goods China`s performance has an impact globally and its recent slowdown -- it grew last year at its slowest pace in a quarter of a century -- has weighed on the world economy.

"Exports missed estimates mostly because trade is generally very volatile in the first two months due to the Chinese New Year factor," Wen Bin, a researcher at China Minsheng Banking Corp. in Beijing, told Bloomberg News.

Imports surged as economic activity recovers and commodity prices increase, he added.The data come as a cloud of uncertainty hangs over global trade owing to fears US President Donald Trump will press on with a protectionist agenda and kick off a trade war with China.

He has repeatedly accused of currency manipulation, unfair trade practices and stealing US jobs while warning he will slap massive tariffs on its goods.

Despite its overall deficit, China maintained a trade surplus with the US in February of $10.4 billion, the Customs data showed.

China`s February trade deficit is "unlikely to persist" and "indicates little change in China`s trade dynamics," Betty Wang of ANZ Research said in a note.

"We expect China to move back to a trade surplus in the coming months."

A cooling property market and authorities` aim to push through tough cuts to bloated sectors will likely weigh on import demand in coming months, Zhao Yang of Nomura said in a note.

"With growth in China currently running above trend and both monetary and fiscal policy being tightened, it is only a matter of time before we see a slowdown in domestic demand," Evans-Pritchard said.

China on Sunday trimmed its 2017 economic growth target to "around 6.5 percent" in the midst of an array of challenges.

Authorities vowed "a steady rise in import and export volumes, and a basic balance in international payments" in a work report delivered by Li Keqiang to the National People`s Congress on Sunday.