The trade surplus of the dragon economy shrank to the lowest level in 12 months in the month of February as imports surged more than anticipated. The surplus narrowed down to $7.6 billion from $14.2 billion in January even as exports continue to gain.

Imports rose 44.7 per cent when compared to a year ago, the customs bureau said in a report published on its Web site.

The drag in export figure also brought down to surplus from January, which jumped 45.7 per, but compared to January, were down 2.2 per cent on a seasonally adjusted basis.

Alaistair Chan, an economist at Moody's said that the declines in the trade surplus "could reduce expectations of yuan appreciation." Just yesterday in one of the most explicit signals till date with respect to its current exchange rate policy, the Chinese central bank Governor Zhou Xiaochuan said his country would in due course move from Yuan's de-facto peg to the US dollar.

Without giving any timeline, Xiaochuan said the country doesn't want to keep its currency pegged to dollar indefinitely.