Uncertain outlook for major economies posing challenge

China's trade surplus will continue to fall in the coming months after hitting a nine-month low in January, amid increased imports in the run-up to the Chinese New Year holidays and surging commodity prices, economists say.

The surplus fell 53.5 percent to $6.46 billion (4.77 billion euros) last month, China's General Administration of Customs said on its website on Feb 14.

Exports rose 37.7 percent to $150.73 billion from a year earlier, while imports climbed 51 percent to $144.27 billion.

Trade with the European Union, the country's largest trading partner, increased 30.5 percent year-on-year to $45.97 billion in January, according to the Customs.

China's imports from the EU jumped 41.2 percent from a year earlier to $16.8 billion in January, while exports grew 25 percent to $29.17 billion, Customs figures showed.

Economists say the overall trade situation is challenging as the uncertain economic outlook for major economies, including the United States, Japan and the EU, poses difficulties for China's exports.

"The trend shows that China's trade surplus is in decline," says Huo Jianguo, director of the Chinese Academy of International Trade and Economic Cooperation under the Ministry of Commerce.

China's trade surplus has narrowed in recent months as the government has tried to reduce its reliance on exports by boosting imports and domestic consumption after the global economic slowdown.

"As long as China's imports grow faster than exports, China's trade surplus problem will be solved in the next few years," Huo says.

China's annual surplus figure may drop below $100 billion in the next two to three years, he says.

The lower-than-estimated trade surplus is also expected to ease pressure from the US for greater yuan appreciation as a way of addressing the trade imbalance between the two countries.

Analysts say strong consumer demand before the Chinese New Year pushed up imports.

"We believe the New Year contributed to increasing imports," says Chang Jian, an analyst from Barclays Capital.

The value of China's foreign trade in January rose 43.9 percent year-on-year to $295.01 billion, the Customs said. Imports and exports rose as businesses accelerated shipments in advance of the holiday period, it said.

Higher commodity prices have also played a big role in boosting the cost of China's imports, as prices for raw materials such as iron ore and copper are at, or close to, record highs.

According to Customs figures, the price of iron ore, one of China's major imports, surged 66.1 percent to $151.4 a ton last month. The price of imported soya also increased 20.4 percent to $558.1 a ton.

"We expect world commodity prices to remain high and that will push up the cost of China's imports in the coming months," says Lu Zhiming, an analyst from Bank of Communications.

He estimates China's trade surplus this year will drop to $150 billion, from $183.1 billion last year.

The value of Sino-US trade increased 39.2 percent year-on-year to $36.87 billion. China emerged as the leading market for US agricultural exports, according to statistics released by the US Department of Agriculture on Feb 11. But figures from the US Department of Commerce on the same day also showed that the deficit with China rose 20.4 percent last year.