China's trade surplus fell to US$123.72 billion in the first seven months, down US$13.1 billion, or 9.6 percent year on year, the General Administration of Customs said on Monday.

Exports in the first seven months totaled US$802.91 billion, up 22.6 percent year on year. But the growth rate was 6 percentage points lower than a year earlier. Imports grew 31.1 percent to US$679.2 billions.

Analysts said the falling trade surplus was partly a result of the government's policies to tame surplus. But also playing its part was the value of imports, which jumped on surging world commodity prices.

The situation of the country's trade remained good, said Li Jian, an expert with the Academy of International Trade and Economic Cooperation under the Ministry of Commerce.

The slower growth in exports was in line with the authorities' expectation for a slower, but sustainable economic growth, Li said.

Exports in July increased 26.9 percent over the same period last year, up from 17.6 percent in June. Meanwhile, imports rose 33.7 percent, compared with an increase of 31 percent in June.

The European Union (EU) continued to be the country's biggest trading partner, with two-way trade totaling US$243.14 billion, up 27.9 percent from January to July.

Exports to the EU rose 27.1 percent to US$165.04 billion, while imports grew 29.8 percent to US$78.1 billion, leaving a trade surplus of US$86.94 billion, up 24.9 percent year on year. The surplus growth, however, had decreased 29 percentage points.

Those to the United States, the country's second biggest trade partner, rose 9.9 percent to US$140.39 billion with a trade surplus of US$91.67 billion, up 3.8 percent year on year. The surplus growth, however, also declined by 15 percentage points.

Japan remained China's No. 3 trade partner with bilateral trade totaling US$154.93 billion, up 19.2 percent.

Jan.-July exports to Japan reached US$65.48 billions, up 15.9 percent, while imports totaled US$89.45 billion, up 21.6 percent. This created a trade deficit of US$23.98 billion, an increase of US$7 billion over the same period of last year.

"As a low-cost manufacturing giant, China is still a strong competitor on the international market," said Long Guoqiang, deputy director of Foreign Trade Department of the State Council's Development and Research Center.

It was natural to see falls in exports growth when export industries plagued by negative factors, including weak global demand, yuan appreciations and higher labor and raw material costs, according to Long.

The producer price index (PPI) for the country's industrial products increased 10 percent in July over the same period last year, the National Bureau of Statistics said on Monday. The double-digit PPI, which measures the value of finished products when they leave the factory, was the highest since 1996.

The customs administration said the average prices of primary product imports had soared. The country's imports grew drastically by 70.6 percent to US$221.65 billion in the first seven months, 32.6 percent of the total imports in the same period.

China imported 24.94 million tons of coal during the seven months with its average price jumping 51.9 percent to US$70 per ton. Imported soy bean grew to 20.73 million tons with its average prices up 78 percent to US$591.70 per ton.

(Xinhua News Agency August 12, 2008)