China's trade growth slows further in June

BEIJING (AP): China's import growth decelerated further in June as the world's second-largest economy cooled, widening its trade surplus to $22.2 billion, data released Sunday showed.

Import growth fell to 19.3 percent, down sharply from May's 28.4 percent. Exports set a record of $161.9 billion but growth eased to 17.9 percent from May's 19.4 percent amid Europe's debt crisis and a sluggish US expansion.

China's demand for factory machinery, iron ore and other imports has eased as Beijing tightens controls to cool an overheated economy. That could hamper a global recovery because the United States, Europe and other economies were counting on relatively robust Chinese growth to drive demand.

China's economy expanded by 9.7 percent in the first quarter but manufacturing and other activity has declined as Beijing tries to steer growth to a more manageable level after last year's double-digit expansion.

The government has raised interest rates five times since October, most recently on Wednesday, and imposed investment curbs. Analysts say controls might be tightened further after June inflation surged to a three-year high of 6.4 percent.

China's imports surged in May, but many analysts said that was a fluke and underlying momentum for trade growth was weak. The June figures were in line with that outlook.

China's global trade surplus for June was the highest this year and a marked increase over May's $13 billion.

Chinese purchases of American goods fell 11 percent from a year ago, widening China's trade surplus with the United States by 20.9 percent to $19.1 billion. Imports of European goods fell 6 percent, widening the trade surplus with the 27-nation European Union by 19.8 percent to $12.7 billion.

The weakening in imports came despite a gradual rise in China's yuan against the dollar in recent months that has made foreign goods cheaper in local currency terms.

Beijing is under pressure from Washington and other trading partners to ease controls that they complain keep the yuan undervalued and swell China's trade surplus. The government has allowed the currency to rise but not as fast as critics want.

Chinese manufacturing activity has declined steadily in recent months due to curbs on credit and weaker overseas demand, cutting demand for imported raw materials and components.

Manufacturing activity in June slipped to a 28-month low, according to the China Federation of Logistics and Purchasing, an industry group. It said the downward trend was likely to continue.

China recorded a trade deficit for the first three months of 2011 and a surplus of just $140 million for March.

Analysts expect China to show a global trade surplus for the year of $160 billion to $200 billion. Last year, China ran a trade surplus of about $16 billion a month.