The surplus for the first six months of the year came in at 99.04 billion dollars, the customs bureau said, with strong domestic consumption also helping to boost imports and ease the trade imbalance.

The surplus in June alone fell 20.7 percent to 21.35 billion dollars, while the six-monthly fall in the surplus was just over 11.8 percent.

Analysts said the global economic slowdown, the appreciation of the Chinese currency, the yuan, and rising production costs were the fundamental factors acting as a drag on the Chinese export machine.

"Currency appreciation, rising costs of labour, raw materials, land and environmental protection, and the removal of favourable policies toward exports have all been eroding the competitiveness of Chinese exporters," said Lehman Brothers' Hong Kong-based economist Sun Mingchun.

"On top of all these, the unfolding global economic slowdown is adding more salt to the wound."

Total trade in the first half of this year was 1.23 trillion dollars, up 25.7 percent from the same period last year.

Imports from January to June grew 30.6 percent to 567.57 billion dollars, the bureau said on its website. Exports rose by 21.9 percent year-on-year to 666.61 billion dollars.

Sherman Chan, an economist at Moody's Economy.com, said the 8.0-magnitude earthquake in Sichuan province on May 12, which left nearly 88,000 people dead or missing, also had an impact on exports.

"The earthquake in May... disrupted economic activity across the country," Chan said.

"Resources have been relocated to emergency relief and production became more domestic-oriented as demand for aid materials surged. The switch in focus to the domestic sector was in part responsible for the slowdown in exports."

The Chinese government said last month the nation's trade surplus was likely to shrink in 2008 for the first time in five years on weakening exports.

Beijing has allowed the yuan to rise steadily from 8.3 to the dollar about three years ago when it loosened the peg to the greenback to roughly 6.85 now, placing huge pressure on Chinese exporters and making imports cheaper.

The currency has appreciated by over six percent this year, however the United States still believes this is not fast enough, accusing China of keeping the yuan artificially weak to boost its exports.

China has also cut the export tax rebate and removed some import tariffs in a bid to narrow the trade surplus.

But with many exporters being forced out of business or facing shrinking profits, some analysts said the government may have to backtrack on some of its measures to curb exports.

In fact, the Beijing News reported Thursday that China would probably announce this month a two-percent increase in the export tax rebate of textile products.

"The worries over the export sector get worse and political pressure for loosening (of policies to curb export growth) rises," said Stephen Green, a Shanghai-based analyst with Standard Chartered, in a research report.

Export growth is likely to continue its weakening trend this year because of the sluggish growth prospect of developed economies, according to Green.

However even a fall of over 10 percent would still keep the surplus at near record levels.

The trade surplus last year reached 262.2 billion dollars, a surge of nearly 50 percent from 2006 and a 10-fold rise from 2003.

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