China weathers record $31B trade deficit in Feb.

China’s trade deficit ballooned to $31.5 billion last month thanks to lower domestic demand, Europe’s debt crisis and the weeklong Lunar New Year, customs data released today show.

It’s the largest shortfall since 1989, Bloomberg reported.

Chinese Premier Wen Jiabao is expected to ease policy to spur growth.

“The trend of weaker export growth tends to make policy makers more concerned about the downside risks to growth and may mean policy will be on the loose side,” Goldman Sachs economist Song Yu told Bloomberg.

Imports climbed nearly 40 percent compared to the same time last year as exports rose about 18 percent.

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Chinese imports dropped 15 percent in January, but the numbers are skewed by the holiday.

Song said improving imports “reflects a reasonable level of domestic demand growth.”

A slowing Chinese economy is also reducing demand for imports, The Associated Press said.

However, the European crisis and a weak US economy is hurting Chinese exporters, the AP said.

Factories are back to work, Reuters reported, meaning more orders should be filled to give the numbers greater clarity.

Reuters also cautioned against viewing January and February numbers alone. Instead, it suggests combining them to gauge the health of the world’s second biggest economy.

By the end of the first quarter, China’s economy is expected to slow 8 percent for a fifth consecutive quarter of decline.

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