China's trade surplus shrinks

China's trade surplus has slipped to $6.5 billion in January, down from $13.1 billion in December, as imports rose by almost double analysts' expectations.

The country's imports have jumped by 51 per cent in the last month, higher than the 28 per cent increase that was forecast as China tries to keep up with demand from a growing consumer base and construction needs.

Of interest to Australian analysts are China's commodity imports; the country is the world's largest copper consumer and it bought 5.7 per cent more of the metal in January.

Analysts say this is a good result.

"People were expecting January to be weaker. This comes as a bit of a surprise given the closed arbitrage situation and the holidays. This is certainly a positive start for 2011," ANZ commodities analyst Natalie Robertson said.

Exports also grew faster than expected and were up 38 per cent in the same period.

China's trade in the month of January often swings wildly due to seasonal distortions from the Lunar New Year holiday.

"As a result, we can only have the first Lunar New Year distortion-free reading after the release of March data in April," Goldman Sachs economists Yu Song and Helen Qiao wrote in a note.

"Having said that, we do believe January data reflects the strong underlying growth momentum for both exports and imports.

"The strong export growth momentum is supported by improvements in economic conditions in China's major trading partners and strong imports growth momentum is supported by strong domestic demand growth, which is in turn supported by continued loose domestic liquidity conditions."

The Australian dollar was more or less flat after the Chinese trade data was released and by 4:00pm （AEDT） it was worth 100.4 US cents.