Chinese imports plummeted during the month of January, signaling that the rapid economic growth of the world's second biggest economy might be slowing down. Chinese imports dropped 15.3% in January, compared to the same month last year, while exports fell by just 0.5%. The sudden drop in imports caused China's trade surplus to surge to $27.3 billion, up from a $16.5 billion trade surplus in December. Many analysts blamed the sudden drop in imports on the Chinese Lunar New Year, which took place in January of this year unlike last year when the important Chinese holiday was in February. Much of China shuts down during the holiday, with many factories closing down or scaling back production as workers travel home to visit their families. While much of the slowdown can be blamed on the Chinese Lunar New Year there's growing concern that the resilient Chinese economy could finally be feeling the ill effects of the financial crisis that's plagued the Europe Union. The drop in imports also seems to validate the worries of many analysts and policymakers that China's domestic demand could be cooling. There have already been warnings that China's economic growth could soon be hampered by the financial trouble that many European Union member countries have found themselves in. China's economic growth had already begun to slow down in the 4th quarter of 2011, prompting officials to shift their efforts to promoting growth and away from fighting inflation. Earlier this week, the International Monetary Fund (

) warned that China's economic growth rate could be cut in half if Europe and the United States fall into recession. The IMF urged China to consider implementing an economic stimulus plan if recession in Europe or the United States threatened to curb demand for Chinese products and hurt China's export driven economy. Before news of the drop in imports came out, Chinese authorities were already shifting their focus from fighting inflation to supporting economic growth. However, yesterday's announcement by the National Bureau of Statistics that inflation had climbed much higher than expected during January seemed to take the steam out of any near terms plans to try to stimulate economic growth. Today's news of falling domestic demand combined with yesterday's news of unexpectedly high inflation puts Chinese policymakers between a rock and a hard place. With economic indicators showing softening demand along with rising inflation, it's likely that Chinese leaders will take a wait and see approach in order to find out just how much the Chinese Lunar New Year is distorting the January economic figures. Investors might also want to take a similar approach and wait until economic data for February is released before making any China related trade decisions.