BEIJING, March 10 (Xinhua)-- China's trade surplus shrank to 8.56 billion U.S. dollars in February, roughly one third of the level in the same month last year, the General Administration of Customs said on Monday.
Weakening U.S. demand resulted from the still-spreading sub-prime mortgage crisis was the reason, said Zhang Yansheng, head of the International Economic Research Institute under the National Development and Reform Commission.
The contractual Foreign Direct Investment (FDI) because of foreign trade policy restructuring also explained the big drop, Zhang told Xinhua.
Since the government declared its fight against inflation and an overheated economy as the top concern on its 2008 agenda, the gap between export and import is expected to continue to narrow, he said.
The economic situation of both China and the world is becoming more complicated this year, posing more uncertainty for this year's economic and trade tendency, Zhang said.
In February, imports surged by 35.1 percent to 78.81 billion U.S. dollars while exports rose just 6.5 percent to 87.37 U.S. dollars.
The trade gap was less than half of the January figure of 19.49 billion U.S. dollars. It has been falling for four straight months since last October.
The country's trade volume in February reached 166.181 billion U.S. dollars, 18.4 percent up from a year earlier, according to the administration.
Analysts believe the unprecedented snow disaster that hit much of southern China in February was also part of the reason for the shrinking trade surplus.
The Lunar New Year holiday during which factories halt production also contributed to the decline, analysts said.
The sharp fall in February will go some way to counter complaints from the United States and from the European Union over China's trade surplus, which hit a record $262.2 bln in 2007.
Exports to the United States, China's No. 2 trading partner fell 5.25 percent year on year in February to 15.48 billion U.S. dollars, the customs said, while imports of U.S. goods jumped 47.8 percent to 6.1 billion U.S. dollars.
Exports to the European Union, China's largest trading partner grew 1.6 percent to 18.4 billion U.S. dollars from a year earlier while imports from the region soared by 30.43 percent to 8.39 billion U.S. dollars.
Zhang Yansheng noted the accelerating appreciation of China's currency, or yuan against U.S. dollar helped bridge the gap.
The yuan set a new high on Feb 29, hitting a central parity rate of 7.1058 yuan against one U.S. dollar.
Over the first two months of this year, the Chinese currency appreciated 2.80 percent and climbed 14.13 percent against the U.S. dollar since a new currency regime was imposed in July 2005 to revalue and de-peg it from the dollar.
As part of its bid for balanced trade and because of fears about the environment, China moved last year to discourage exports of products that are resources-intensive, such as aluminium and steel, through scrapping or cutting tax rebates.
Government policy adjustment began to pay off as it was evidenced by the contracting gap, Zhang said.