China's monthly trade surplus in July dropped 2.55 billion U.S. dollars, or 10.4 percent, from June to 24.35 billion U.S. dollars, the General Administration of Customs said on Friday.

The figure was the second highest monthly level on record.

The country's trade surplus totaled 136.81 billion dollars in the first seven months, the administration said.

July's imports and exports both hit monthly records: imports rose 26.9 percent on July last year to 83.39 billion dollars while exports were up 34.2 percent to 107.74 billion dollars.

Imports rose 7.03 billion dollars from June while exports were up 4.47 billion dollars.

China's foreign trade for the first seven months totaled 1.17 trillion U.S. dollars, up 24.4 percent from the same period last year.

A report published on Wednesday by the People's Bank of China predicted that the country's trade surplus would remain high while the growth is expected to slow.

It predicted that global demand will remain strong as the world economy may grow by four percent year on year. Meanwhile, accelerating investment in China will result in increased export capacity.

Customs data shows China's processing trade in the first seven months rose 18.5 percent over the same period last year to 523.8 billion dollars, accounting for nearly half of the country's imports and exports.

Qi Jingmei, an analyst with the State Information Center, predicted that export growth in the second half will slow down to 21 percent to 24 percent as the country moves to ease trade restriction with other countries.

In the first seven months, the European Union remained China's top trading partner, with bilateral trade volume reaching 190 billion U.S. dollars, up 28.5 percent on last year.

The growth was 11 percentage points higher than China-U.S. trade growth in the same period and 13.3 percentage points higher than China-Japan trade growth.

Despite the yuan's appreciation, the government still faced difficulty in reducing the trade surplus, said Zhang Yansheng, director of the International Economic Research Institute of the National Development and Reform Commission.

The currency appreciation failed to affect foreign trade as expected, Zhang said.

More than 55 percent of China's exports were made by foreign-funded enterprises, which were little affected by the appreciation as 70 to 90 percent of their materials and spare parts were purchased aboard, he said.

Most foreign-funded enterprises were also unaffected by reduced or canceled export rebates measures as they were chiefly in the IT and equipment manufacturing industries rather than steel and textiles, which were covered by export rebates, Zhang said.

To avoid or reduce the impact of appreciation and export rebate measures, large domestic businesses chose to develop new products, raise prices and produce goods unlisted in the rebate-cut measures, he said.

(Xinhua News Agency August 11, 2007)