China's foreign trade rose 20.8 per cent year-on-year to US$120.8 billion in July, keeping the figure above the US$100 billion mark for the fifth month in a row, according to latest statistics published Thursday by China's General Administration of Customs.

Exports hit US$65.6 billion in July, up 28.7 per cent year-on-year, while imports stood at US$55.2 billion, up 12.7 per cent. Trade surplus for the month amounted to US$10.4 billion.

In the first seven months, the country's trade volume totalled US$765.9 billion, reflecting a yearly increase of 22.8 per cent.

Cumulative trade surplus from January to July rose to US$50 billion, far exceeding the US$32 billion surplus for all of 2004.

Although the widening trade surplus is intensifying concerns among China's trade partners, economists predict the figure is likely to fall in the second half.

"The possible decline in trade surplus could be attributed to the revaluation of the reminbi first as it encourages imports," said Lu Jinyong, a trade expert with the University of International Business and Economics.

But the 2 per cent appreciation of the Chinese currency, announced last month, is not expected to affect figures for a couple of months.

Chinese textile exporters have already hit the limit of several US and European Union quotas, another factor expected to affect China's exports in the following months.

"The growth rate of exports should decrease and the gap between import and export growth will narrow in the second half of the year," the State Information Centre said in a recent report.

The slowdown in the world economy and the decline in foreign direct investment to China this year will also have some negative effect on China's exports, the centre said.

Source: China Daily