China's trade surplus rose strongly last month but the growth rate was lower than the first quarter.

The surplus hit $16.88 billion in April, up 63 percent year-on-year, the General Administration of Customs (GAC) said on Friday. But it was below February's $23.7 billion - the second highest level on record.

It took the trade gap for the first four months to $63.3 billion, a year-on-year increase of 88 percent.

The GAC said exports growth slowed down in April from the first quarter of the year, while imports accelerated.

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The trade surplus growth rate was 38 percentage points lower than the first three months, though.

GAC statistics show exports jumped 26.8 percent to $97.45 billion last month, while imports climbed 21.3 percent to $80.57 billion.

The big rise followed a plunge in surplus in March. The ups-and-downs left trade researchers puzzled, with many still trying to find the reasons.

"Fluctuations in a couple of months do not give the future trend of the country's imports and exports," said Hua Xiaohong, an expert with the University of International Business and Economics.

But China will continue to see a big trade surplus this year because of its position in the international industrial structure and increasing global demand for made-in-China products, she said.

"It's useful to think about the development of China's trade surplus from another angle, the processing trade surplus (which is big and getting bigger) and the 'real' non-processing surplus, which is strengthening out of deficit, thanks to those capital intensive goods," Standard Chartered Bank's senior economist Stephen Green said.

The main reason why China has a huge trade surplus is processing. The processing surplus was about 9 percent of the GDP last year, up from 6.4 percent in 2005.

In fact, China's trade surplus hasn't increased in some specific areas such as steel products because Beijing imposes stricter restrictions on them.

(China Daily 05/12/2007 page1)