China reported a surprising jump in imports last month, boding well for a strengthening of domestic demand in an economy that has become a major driver of global growth.
The surge in imports also reduced China's politically sensitive trade surplus ahead of U.S. Congressional hearings next week on whether to punish Beijing for what many in Washington see as an unfairly undervalued yuan.
Imports were up 35.2 percent in August compared with a year earlier, easily beating July's 22.7 percent rise and market forecasts of a 26.1 percent increase, the General Administration of Customs said on Friday.
Annual export growth slowed to 34.4 percent in August from 38.1 percent in July but was close to expectations of a 35.0 percent rise.
That left China with a trade surplus of $20.0 billion, down from $28.7 billion in July and well below the median forecast of $27.1 billion.
Wang Hu, an economist with Guotai & Junan Securities in Shanghai, said the import figures along with robust car sales data suggested that China's economy had touched bottom in August.
Growth slowed over the first half of the year in response to government steps to rein in bank lending, crack down on property speculation and close obsolete, energy-guzzling plants in heavy industries such as steel and cement.
"As European and U.S. economic growth has slowed since the second quarter, China may again lead the global recovery," Wang said.
Economists were unsure what lay behind the strength in imports.
"It may suggest that inventory destocking in the heavy industry sector stabilized somewhat in August," said Qian Wang, an economist with J.P. Morgan in Hong Kong.
Dong Xian'an, chief macroeconomist with Industrial Securities in Beijing, said the data implied a strong rebound in domestic demand.
"A possible reason is that China increased imports of raw materials in the last week of August driven by political pressure as well as low global commodity prices," he said.
U.S. lawmakers will hold hearings next week on whether to punish Beijing for what many in Washington see as an unfairly undervalued yuan.
Larry Summers, President Barack Obama's chief economic adviser, visited Beijing this week for talks with President Hu Jintao and other high-ranking Chinese officials.
After the meetings, China and the United States both put an optimistic face on ties that have been jolted by economic and security tensions as well as disagreements over the yuan's exchange rate.
Coincidentally or not, the Chinese central bank allowed the yuan to climb on Friday to its highest level since it was depegged from the dollar on June 19. Still, the yuan has gained less than 1 percent against the U.S. currency since then.
Moreover, China's rolling 12-month trade surplus widened in August to $177.1 billion from $172.8 billion, handing ammunition to critics who say the country is fixated on exports and is fueling unhealthy global economic imbalances.
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