SHANGHAI, Feb 14: Rising global oil prices and heavy government spending contributed to China’s first trade deficit in more than six years in January, analysts said on Friday.

China’s imports rose 63.4 per cent from a year earlier to $31.02 billion in January, while exports rose 37.3 per cent to $29.77 billion, leaving a deficit of $1.25 billion, according to the General Administration of Customs.

It is China’s first trade shortfall since 1996, and comes amid worries that a US-led war in Iraq could lead to a steep drop in the mainland’s trade growth this year.

In response to these concerns China, the world’d third-largest oil user, has been building up oil reserves with money it does not really have, analysts said.

China has been trying to build up oil reserves, but does not have the money to do that. So when the oil price soars up, they immediately feel the consequences, said Andy Xie, chief economist for Asia-Pacific at Morgan Stanley.

China imported 8.36 million tons of crude oil in January, up 77.7 per cent from a year earlier, accompanied by a 51 per cent rise in the import price, the Xinhua news agency said.

In after hours trade on the New York Mercantile Exchange, crude oil for March delivery hit a 28-month high of $36.70, up more than 70 per cent from a year earlier.

There has been a rise in the price of commodities and China is a huge importer of commodities, said Xie.

Marvin Wong, an economist with Merrill Lynch, said that in addition to oil prices, expectations by local companies of more trade prior to the week-long Lunar New Year holiday, which began on February 1, influenced the trade figures.

Import growth is expected to be faster than export growth this year due to strong domestic demand, said Wong, but he added the country was still expected to post a $24.4 billion trade surplus this year.

China’s 2002 exports rose 22.3 per cent to $325.57 billion, with imports up 21.2 per cent at $295.22 billion, according to official statistics.

But according to Xie, China’s trade figures are consistently inaccurate, with China never really having had a trade surplus because a great portion of imports from Hong Kong are not counted.

SINGAPORE: Oil prices rose to their highest in 28 months on Friday ahead of a key report in the UN that could determine the course of action to disarm Iraqi President Saddam Hussein, analysts said.