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China's foreign trade prospects cloudy

2011-08-10 15:50

BEIJING -- China Wednesday reported faster than expected growth in exports, imports and trade surplus in July, but analysts said the picture would become worse in the coming months amid a faltering global economy.

Trade surplus rose sharply to $31.48 billion in July from June's $22.27 billionĀ  and the $28.7 million in the same period a year ago, the General Administration of Customs (GAC) said on its website.

July exports rose 20.4 percent year-on-year to reach $175.128 billion , a record monthly high compared with 17.9 percent in June.

Imports quickened from June's 19.3 percent to 22.9 percent to $143.64 billion .

The robust readings suggests both China's competitiveness in exports and domestic demand are in relatively good shape, Bank of America-Merrill Lynch economist Lu Ting said in an email to clients.

Exports to the European Union (EU) and Japan rose to 22.3 percent and 27.2 percent year-on-year in July from 11.4 percent and 20 percent in June.

That to the United States was at 9.5 percent, down slightly from 9.8 percent in June, but down significantly from 13.3 percent in the second quarter and 21.4 percent in the first quarter, which indicated the US weakness has been weighing on its imports from China, according to Lu.

However, the pain of external turmoil will gradually be felt by Chinese exporters in the rest of the year, as the sovereign debt crisis in the EU and credit downgrade in the United States has generated more uncertainty about the recovery of the global economy, analysts said.

According to Lu's estimation, China's export and import growth will slow to 16 percent and 23 percent in the second half of this year from 24 percent and 27.6 percent in the first half. The trade surplus will increase to $97.2 billion, up from $46 billion in the first half.

Import growth will trend down on the back of declining commodity prices and soft landing of the domestic economy, he said.

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