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Update: China trade slumps in first half of year

[BEIJING] China's total trade slumped in the first half of this year, official data showed Monday, far off the government's targets and dealing a blow to the global economy from the world's biggest trader in goods.

Two-way trade for the first six months of the year fell 6.9 per cent to 11.53 trillion yuan (S$2.5 trillion), the General Administration of Customs said.

China is the world's second-largest economy and a key driver of global growth, with an outsized impact in resource-rich supplier countries such as Australia.

Monday's result was far below Beijing's official target for the year for growth of "about 6.0 per cent". That figure was a reduction from the 7.5 per cent goal set for 2014 - when trade values expanded only 3.4 per cent, the third consecutive year the target had been missed.

"Commodity prices fell significantly, dragging down growth in import value," Customs spokesman Huang Songping told reporters, adding that "sluggish foreign demand" was a "major factor" affecting trade growth.

"Export costs remained high, undermining export competitiveness," he said, adding that by June 30, the yuan had strengthened 0.2 per cent against the dollar from the start of the year, 6.9 per cent against the euro and 2.2 per cent against the yen.

"The downward pressures on the domestic economy increased and the demand for imports was weak," he said.

For June, China's imports fell for the eighth consecutive month, Customs said, dropping 6.7 per cent year-on-year to 890.67 billion yuan.

But exports increased 2.1 per cent to 1.17 trillion yuan on-year - snapping a run of three monthly declines in a row - and the country's trade surplus leaped 45.0 percent to 284.2 billion yuan.

Chinese stock markets have been in turmoil in recent weeks, but the benchmark Shanghai Composite Index was up 1.49 per cent in late morning, maintaining a positive tone after the figures were released.

The latest report comes as Chinese authorities manage what they describe as a "new normal" economy in which they steer it away from a traditional model of high growth based on big investment projects and towards one where consumer demand takes prominence.

China's gross domestic product (GDP) expanded 7.4 per cent in 2014, the lowest rate in nearly a quarter of a century, and signs of further weakness have mounted this year.

GDP expanded 7.0 per cent in the January-March period, the worst quarterly result in six years.

China announces second-quarter GDP figures on Wednesday and the median forecast in an AFP poll of 14 economists indicates GDP expanded 6.9 per cent in April-June.

For all of 2015, the survey predicts growth at a median 7.0 per cent, more optimistic than a forecast of 6.8 per cent in a similar poll in April and in line with the government's official target of "about 7.0 per cent".

Authorities have taken steps to boost slowing economic growth, cutting interest rates four times since November while also lowering the amount of cash banks must hold in reserve in a bid to boost lending.

They have also had to deal with weeks of volatility on stock exchanges, taking aggressive measures to stabilise the Shanghai index, which fell more than 30 per cent in less than four weeks before reversing course in the past three trading days.