China's trade surplus narrowed in 2010 for the second straight year - helped by increased domestic demand - and the trend is expected to continue for the first half of 2011, economists said.

The trade surplus for 2010 totaled US$183.1 billion, down 6.4 percent from a year earlier, according to figures released by the General Administration of Customs on Monday.

The news of a smaller trade surplus came just a week before President Hu Jintao's visit to the United States and shows that China is rebalancing its economy toward greater domestic consumption and boosting the world economy with a greater demand for imports.

The balance of trade and yuan appreciation will top discussions between China and its trade partners including the US, economists said.

"China is going through a transition from an export-driven economy to one driven by domestic demand," Ted Dean, chairman of the American Chamber of Commerce in China, told China Daily.

"It's important, necessary and happening," Dean said, adding that the changing growth model means greater opportunities for US companies in China.

Increasing domestic demand will open up new markets for US companies in sectors such as services, retail and technology, Dean said.

Matt Robinson, a Sydney-based senior economist at Moody's Analytics, said China is rebalancing its economy away from a reliance on the external sector. An increasingly affluent and consumer-driven society will result in higher imports and cause the trade surplus to shrink in the coming years, he said.

As the growth in imports outpaced exports, the country's trade surplus in December was US$13.1 billion, an eight-month low.

Imports surged by 25.6 percent in December, and exports grew 17.9 percent year-on-year.

China's overall foreign trade last year jumped 34.7 percent from 2009 to US$2.97 trillion.

"The low trade surplus didn't come easily as the country managed to maintain trade growth at the same time," said Huo Jianguo, head of the Chinese Academy of International Trade and Economic Cooperation, which is affiliated to the Ministry of Commerce.

"The slowing growth of exports is in line with expectations, as a result of rising costs and pressures for yuan appreciation. However, the surge in imports is beyond predictions," Huo said.

He said the increase in imports was due to a sharp upturn in the economy and trade growth at the end of the year as well as stronger domestic consumption, though he predicted that exports will face increasing challenges in 2011.

However, the trend of increased import growth, outpacing exports, is expected to continue in the first half of 2011, amid efforts to increase domestic consumption, Huo said.

Other economists agreed.

China's export growth is expected to slow to 17 percent in 2011 with import growth at 19 percent, said Chang Jian, an analyst at Barclays Capital.

Ma Jun, chief economist of Deutsche Bank Greater China, said exports are expected to decrease to 15 percent, down from 30 percent in 2010.

Vice-Premier Li Keqiang said on Saturday that China's economy grew by around 10 percent in 2010, higher than single-digit predictions by some economists.

"The driving force of domestic consumption is rising, and its increase contributed over 90 percent to economic growth (in 2010)," he was quoted as saying by the People's Daily.

(China Daily January 11, 2011)