Holiday effect

The government has in the past pointed to a narrower trade surplus as evidence that it is making headway in tilting China away from excessive reliance on exports, a shift that is seen as a crucial part of putting the global economy on firmer footing.

But many economists cautioned against reading too much into one month's trade data, especially in the first quarter.

Chinese exports typically slump at the start of the year, with the country's factories shut or running at half speed for weeks because of China's New Year holiday, which this year fell in the first week of February.

"We believe the trade deficit is likely to be a temporary phenomenon distorted by the Lunar New Year. During the several weeks following the Lunar New Year, the holiday distortions affect exports much more than imports because exporters have a much greater tendency to take extended holidays," Yu Song and Helen Qian, economists with Goldman Sachs, said in a note.

Yet the holiday effect had been expected to weigh on exports when analysts made their initial forecasts, so some said that the downside disappointment in the data was, in fact, a worry.

"Both imports and exports are lower than expected, and seasonal factors alone can't explain the sharp monthly drop," said Xu Biao, economist with China Merchants Bank in Shenzhen.

Controling for holiday

Because of distortions caused by the Chinese New Year, some analysts prefer to look at data for January and February together.

On that combined basis, exports rose 21.3 percent from a year earlier and imports increased 36.0 percent, both of which were faster than December's pace.

The average trade balance for the first two months of 2011 was a $0.4 billion deficit, far below the monthly average of a $15 billion surplus last year.

"We look at January and February together. On that basis, growth is still quite healthy. We were expecting exports and imports to slow this year due to weak external demand, so this is line with that," said Tao Wang, chief China economist for UBS.

With import growth set to outpace export growth, China was hoping to narrow its trade surplus for the third straight year, Commerce Minister Chen Deming said earlier this week. China's trade surplus was $183 billion last year, down from $196 billion in 2009 and a record $295 billion in 2008.

Chen also said that the yuan was on "a gradual upward trend", but that there was no reason for it to move any faster. The yuan appreciated about 4 percent against the US dollar since being depegged last June.