China's imports surged 34.1 per cent in the first two months of the year, according to customs figures reported in China Securities News . Imports hit US$18.37 billion, outpacing exports, which fell 1.3 per cent in January and February to $17.83 billion. The trade deficit of $540 million in January and February was down from $960 million in January alone, indicating China earned a trade surplus last month. No separate figures for February were given. Hongkong Bank China Services research manager Benny Chiu Ling-bun said: 'It has been the fourth consecutive month China recorded a negative export growth.' In the first two months of this year, China's trade grew 13.9 per cent to $36.2 billion. China recorded its first monthly trade deficit in 19 months in December, showing a deficit of $1.2 billion. Last year's surplus was $16.7 billion, up from $5.3 billion in 1994. Schroders Securities economist Tao Dong forecast that the negative export growth would remain in the coming months, citing the high comparative base in the first quarter of last year. China's exports showed year-on-year growth of 88.3 per cent in January last year and 55.3 per cent in February, boosted by speculation it would cut value added tax (VAT) rebates, as exporters scrambled to beat the imposition of lower rebates. China has charged a VAT of 17 per cent since January, 1994, and has promised exporters a full rebate. The rebate has been cut on a number of occasions because of the heavy cost to government revenues. W.I. Carr (Far East) economist Joe Zhang said: 'It will be quite unlikely for China to post strong export growth as in the first quarter of 1995.' He said the negative export growth would continue until May when a turnaround could be expected. He said influences for the change were the lower base, comparatively, after May and possible administrative measures adopted to encourage exports. The higher yuan was another factor that would help lower export growth. Mr Zhang said the yuan had appreciated roughly 5 per cent, from 8.7 yuan to the US dollar, in January, 1994, to 8.3 yuan recently. 'The yuan's appreciation has meant China's exports are not competitive,' he said. W.I. Carr expected China to post full-year export growth this year of 10 per cent. Import growth for the full-year 1996 would reach 20 per cent, which Mr Zhang said was 'a very conservative' forecast. Mr Tao, of Schroders, expected that China's trade figures would be steady in the full-year 1996.