Chinese trade data in July surprised on the upside yesterday, registering surprisingly firm rebounds in both exports and imports, and sparking hope that a slowdown in the world's second-largest economy might be easing.

The outlook for China has been gloomy for the past two quarters, and signs the economy could be stabilising will come as a relief to the country's leadership, which has been trying to introduce economic reforms.

Exports beat expectations and rose 5.1 per cent year-on-year in July, after falling 3 per cent year-on-year in June in dollar terms, data from the Customs Administration showed. The June decline was the first fall in exports in 17 months and the figure compares to a 3 per cent rise forecast by analysts.

Imports also rebounded in July, up 11 per cent year-on- year following a marginal annualised fall of 0.7 per cent the previous month, also beating forecasts, leaving China with a smaller-than-expected trade surplus of $17.8 billion (€13.32 billion).

"The rebound in both China's exports and imports in July was bigger than most had expected," Qinwei Wang, China economist at Capital Economics, wrote in a research note. "On the export side, there are signs that foreign demand is recovering. Meanwhile, the import data provide further evidence that investment is picking up following a strong expansion of credit over the past year."

Crude oil imports were most likely lifted by refiners replenishing stocks after a three-month lull, and as some new refineries started business.

Steel imports, which fell 1.8 per cent year-on-year in June, were up 1.7 per cent last month, and copper ticked up from 9.7 per cent annual growth to 12 per cent year-on-year. Soybean purchases hit a record for the second straight month.

“Commodity imports [in volume terms] were especially strong and support other evidence pointing to a rebound in investment,” wrote Mr Wang.

While this suggested the rapid expansion of credit over the past year was finally passing through to the real economy, given government efforts to rebalance the economy away from investment, he doubted that the pick-up in commodity imports would be sustained.

Exports to China’s biggest export market, the US, rose an annual 5.3 per cent and those to Europe were up 2.8 per cent, as China’s two biggest markets posted their strongest gains since February. Shipments to southeast Asia were also up year-on-year.