China's export growth may remain above 20 percent in the second half of this year if the government adjusts policies to bolster the sector, said a research report by China Construction Bank released on Monday.

But the real pace of export growth was actually slowing down sharply once price increases and the rising Chinese currency were taken into consideration, the report said.

"We think the export sector will keep stable in the second half, especially if the government rolls out some supportive policies to save those export-oriented companies - they are important to the labor force," said the bank.

In the first half, China's exports gained 21.9 percent year on year, although the rate of the growth was down 5.7 percentage points from a year earlier. The growth for the whole year may stay above 20 percent, the bank said.

China needs to create 24 million new jobs each year and foreign trade, where private companies concentrate, creates a large number of those vacancies. According to industrial statistics, more than 80 million people work in foreign trade.

"To keep the employment rate stable, the government is very likely to adjust the tax rebate policy in the second half and slow the appreciation of the yuan," said the report.

It said electrical equipment, which accounts for 58 percent of China's exports, won't experience a big fluctuation in global demand - another factor enabling export growth to remain stable.

However, the real pace of growth will sharply slow down if price rises and exchange rates are not taken into calculation.

The price increases of key products contributed a striking 78 percent to the export growth in the first six months, and the major reason for the price increases was the more expensive raw materials on the global market.

The Chinese currency appreciated more than 6.5 percent against the US dollar from January to June. It also helped to push the growth rate up but made little contribution in terms of real value, the report said.

(Shanghai Daily July 29, 2008)