China's trade surplus in August rose 14.9 percent from a year earlier, as imports growth decelerated sharply on lower commodities prices.

The surplus last month was US$28.69 billion, posting gains for the second month in a row. The figure was US$25.28 billion in July and US$24.97 billion last August.

Exports in August jumped 21.1 percent to US$134.87 billion, compared with 26.9 percent in July. Imports climbed 23.1 to US$106.18 billion, down from 33.7 percent in July, the General Administration of Customs said on Wednesday.

"Exports growth decelerated, but imports posted a much bigger slowdown as commodities prices and shipping rates slumped," an official with the Ministry of Commerce told Xinhua on condition of anonymity. "This is the main reason for the jump in the surplus."

The slower advance in the Chinese currency against the U.S. dollar also contributed to the surge.

"The yuan remained almost steady against the U.S. dollar since July. This can help exports while giving no further incentives to imports."

In the first eight months, the exports growth slowed on faltering demand from the European Union and Japan, despite a small acceleration in shipments to the U.S.

Exports to the U.S. climbed 10.6 percent from January to August, compared with 9.9 percent in the seven months to July.

"The exports prospects might not be as gloomy as some others claimed," said Mei Xinyu, a researcher at the Chinese Academy of International Trade and Economic Cooperation, a government think tank under the Ministry of Commerce.

"Traditional industries posted slower exports growth, but industries like the electro-mechanical sector reported robust expansion," Mei told Xinhua. "China-made goods are still very competitive on the overseas market."

Overseas shipments of electro-mechanical products soared 24.7 percent to US$538.65 billion. Exports of garments and accessories edged up 2.6 percent to US$75.03 billion.

The trade gap narrowed 6.2 percent annually to US$151.99 billion in the first eight months of the year.

Exports increased 22.4 percent to US$937.69 billion during the Jan.-Aug. period and imports were up 30 percent to US$785.69 billion.

Lowest inflation in a year

The consumer price index (CPI), the main gauge of inflation, eased further to 4.9 percent in August, the lowest since July 2007, the National Bureau of Statistics (NBS) said Wednesday. It hit the 12-year-high of 8.7 percent in February.

This came on falling food prices. Prices in food, which accounted for a third of the CPI, jumped 10.3 percent last month, down 4.1 percent from July level.

"This shows the effectiveness of the government macro-control measures. It didn't come easy when considering the widespread inflation in the world," said NBS chief economist Yao Jingyuan.

"The turning point for a wave of CPI rises had come, as the economic growth gradually slowed and dampened demand," said economist Wang Xiaoguang.

Zhang Liqun, a researcher with the Development and Research Center of the State Council, said some attention should be paid to the rising production costs and squeeze on corporate profits.

The factory-gate prices, another measure of inflation, gained 10.1 percent in August, the highest since 1996 and up from 10 percent in July.

Zhuang Jian, Asian Development Bank senior economist, urged caution over existing inflation pressure as price rises in non-food items accelerated.

But Zhuang added the easing in consumer inflation left more room for the government to adjust macro-control policies for sustainable economic growth.

Economic slowdown

Urban fixed asset investment rose 27.4 percent in the eight months to August, 0.1 percentage point higher than the January-July level and 0.7 percentage points higher than a year ago, according to the NBS.

"The investment growth in nominal terms was acceptable and even showed a sign of accelerating," said Zhang Xiaojing, an economist with the China Academy of Social Sciences.

"But when considering the high investment price index, the real growth was lower than a year earlier."

Zhang Hanya, a researcher with the National Development and Reform Commission, the top economic planning agency, said investment impulse was low because of slower economic growth, yuan appreciation, rising production costs and tight credit controls.

China's gross domestic product (GDP) had been decelerating for four straight quarters through June. Exports, fixed asset investment and consumption are the three drivers of the economy.

"Everybody was worrying about the dismal economic outlook. The monetary tightening since last year was a bit too much," said Zhang Hanya.

"It's normal for the economy to retreat from 11 percent to 10 and even 9 percent," said Wang Xiaoguang. "The economic expansion might slow to as low as 8 percent over the next few years. But the authorities would not allow any slower growth than that.

"The GDP would slow further during the rest of the year with slower exports growth and declining housing prices."

The government has raised tax rebates for textile and garments exports, lifted credit quota and scrapped administrative fees for small businesses amid the latest efforts to boost the economy.

"The relaxation in the macro-economic control is surely a trend, but it would be a gradual process," said Wang Xiaoguang. "The economy now doesn't need any drastic stimulus plans."

(Xinhua News Agency September 11, 2008)