China posted a trade deficit for the first two months of this year after the government cut exporters' tax rebates and stepped up imports following US criticism of mounting surpluses.

　　The two months of deficits totaling US$7.9 billion were China's first since March 2003. Exports rose 29 percent from a year earlier to US$69.9 billion and imports jumped 42 percent to US$77.8 billion, the Ministry of Commerce said on its Website.

　　China's trade surplus with the United States last year widened to a record US$124 billion, equal to a 10th of the Chinese economy, official US figures show.

　　"China is using its trade deficit to soften the US rather than doing something directly about strengthening the yuan," said Chris Leung, an economist with DBS Bank Hong Kong Ltd.

　　Chinese Premier Wen Jiabao on Friday reiterated the government plans to keep the yuan's exchange rate "basically stable," language China's leaders use to deny any change in the currency's peg to the dollar is imminent.

　　During an earlier central officials meeting, he said the country should manage to post a small trade surplus with both exports and imports developing on a healthy track. This would be one of the major goals of China's economic development, he said.

　　To help address US concern regarding the currency issue, Chinese leaders have been taking companies on purchasing trips to the United States in recent months.

　　A delegation of Chinese telephone companies led by Ministry of Information Industry Deputy Minister Lou Qinjian in January awarded Motorola Inc, Lucent Technologies Inc, Cisco Systems Inc and other US suppliers contracts for equipment totaling US$2.3 billion.

　　Chinese companies bought US$8.5 billion of airplanes, cars, machinery and agricultural products in the United States in November and December.

　　For February alone, China's imports surged 77 percent to US$42 billion. That's their biggest increase in more than four years. Exports rose 40 percent to US$34.2 billion, leaving a trade deficit for the month of US$7.87 billion.

　　The reduction of export-related rebates to an average 13 percent of tax bills on January 1 from as much as 17 percent last year may continue to damp overseas sales. Ahead of the change, exports in December jumped 51 percent, their biggest gain since March 1995, as shipments were accelerated to take advantage of the rebates.

　　Overseas sales will probably grow a fifth this quarter, about half the pace seen in the previous three months, the Ministry of Commerce said last month, citing a study by the National Development and Reform Commission.

　　Economists combine China's economic statistics for January and February to minimize distortions caused by changes in the timing of the week-long Lunar new year holiday, which started on January 22 this year and ended January 28 in 2003.

　　(Bloomberg News)