China's Surplus on Trade in Goods Reached $23.76 Billion in February Second Highest on Record

China's trade surplus in February was $23.76 billion, marginally smaller than the record of $23.83 billion reached last October. The surplus was well above expectations. In order to eliminate some of the distortions resulting from the timing of the Chinese New Year, it may be useful to compare January and February of this year with those two months of 2006. Even so, the two month balance of 2007 was more than three times the two month balance of 2006. Total exports for the two months were up 41.7% over the two months of 2006 while imports were up 20.4%.

February trade by country is available only for the United States. Exports to the U.S. in the two months of 2007 were up 35.8% and imports from the U. S. were up 19.2%. While China's surplus with the U.S. continues to grow, the net deficit with all other countries is declining. Prior to 2006 China's surplus with the U. S. exceeded the total surplus as can be seen in the first chart, suggesting that China had a net deficit with all other countries. In 2006, however, and continuing into 2007, the surplus on total trade is larger than the surplus with the U. S., suggesting that the net deficit with other countries is declining. One of the main reasons for the decline in China's net deficit with countries other than the U. S. is the growing increase in the surplus with Europe. In addition, China recorded a surplus with Latin America in 2006 after several years of deficits These changes can be seen in the second and third charts, showing annual exports and imports between China and Europe and China and Latin America.