China's trade surplus in US dollar terms widened from US$75.34 billion in December to US$125.16 billion for January and February combined. Officials combine the trade data for the first two months of the year to remove distortions caused by the timing of lunar new year holidays, in line with other major activity data.

Exports increased 7.1 percent on the year for January and February combined after advancing 2.3 percent in December, while imports rose 3.5 percent after an increae of 0.2 percent previously. In contrast to this improvement in trade flows at the start of the year, PMI survey data showed weak conditions in the manufacturing sector and modest growth in the services sector.

China's trade surplus for the combined months of January and February is expected to total US$106.5 billion. Imports are expected to rise 1.5 percent year-over-year and exports are expected to rise 2.5 percent.

The Merchandise Trade Balance is the difference in value between imported and exported goods. Data are denominated both in U.S. dollars and renminbi. A positive number indicates a surplus meaning that more goods were exported than imported.

Changes in the level of imports and exports, along with the difference between the two (the trade balance) are a valuable gauge of economic trends here and abroad. While these trade figures can directly impact all financial markets, they also affect currency values in foreign exchange markets. However, the foreign exchange impact is muted here given that the currency is pegged to a basket of currencies and its value is determined daily by the government.

China's growth stems from its exports to the industrialized world. And in turn, global growth is dependent upon Chinese growth, especially since the financial woes of 2008.

Merchandise trade statistics are compiled and published by Customs General Administration (CGA) on a monthly basis. Preliminary estimates are available about 13 days after the reference month with details available within 25 days. Since 1980, the compilation of Customs statistics follows the concepts and definitions of the International Merchandise Trade Statistics: Concepts and Definitions. Data are released for total imports and exports in the Chinese currency and the U.S. dollar. There are five main categories each for primary and manufactured goods. Detailed information is available by category, destination country, foreign enterprises and domestic region to name a few. Geographically, the data covers the customs territory of the mainland China and excludes Hong Kong, Macao and Taiwan.