Data coming out of China continues to confuse.   At least it confuses me.

February's trade surplus was smaller than expected.  No big deal.  January's was larger than expected.   The combined surplus was around $12 billion.   That's down a bit from q4, but it should be down from q4.   There is a lot of seasonality in the Chinese data, and q1 is traditionally weak quarter.

What confuses me then?  The fact that the narrowing of the trade surplus seems to be coming entirely from an acceleration of import growth, rather than any real fall off in export growth.   Export growth in January and February was 25.5% -- far stronger than I expected a few months ago.   The trade surplus did not increase because import growth was 27.4%.

Some of that is a base effect - q1 2005 was a very weak quarter for imports.   Particularly oil imports.   Some is a price effect.   China imports oil too.

But some of it may reflect an acceleration in construction - something that could have been spurred by the acceleration in money growth and general loosening of administrative controls that the PBoC put in place after the July revaluation.  They were apparently worried the revaluation would really derail the economy.