China imports break two-year losing streak in August

China`s imports rose 1.5 percent year-on-year in August, figures showed Thursday, the first increase in nearly two years, in a positive sign for the world`s second-largest economy.

Exports dropped 2.8 percent on-year to $190.6 billion, a smaller fall than the median forecast in a survey of economists by Bloomberg News.

The data from Customs was the latest indicator of improving health for the world`s biggest trader in goods, with the rise in imports -- to $138.5 billion -- the first since October 2014.

China is crucial to the global economy and its performance affects partners from Australia to Zambia, which have been battered by its slowing growth.

Its economy expanded 6.9 percent last year, its weakest rate in a quarter of a century.

The "big surprise" of the results was imports, said Julian Evans-Pritchard of Capital Economics, as they hinted at stronger domestic demand.

But he noted that some of the improvement could be attributed to a recovery in commodity prices after years of declines.

For factors behind the exports performance, analysts pointed to a weaker exchange rate for the yuan, which has dropped roughly five percent in the last year despite pledges by central bankers not to depreciate the currency further.

Analysts with ANZ said that the "resilient" trade surplus would help alleviate net capital outflows, but noted that sluggish global demand would still weigh on the outlook for China`s manufacturers.

China`s foreign exchange reserves at the end of August dropped to $3.19 trillion, according to central bank data, their lowest level since the end of 2011.

The August trade surplus fell 13.6 percent from last year to $52.0 billion.

The trade figures recovered from a worse-than-expected performance in July, when imports plunged 12.5 percent on-year, weighed down by weaker commodity prices and lacklustre domestic demand.

Earlier this month an official measure of manufacturing activity also beat expectations, rebounding to its strongest level in nearly two years, with the purchasing managers` index (PMI) coming in at 50.4 in August, a sign of expanding activity in Chinese factories and mines.

But investors shrugged at the improved trade data, with Shanghai stocks flat by the break on Thursday and the benchmark Shanghai Composite Index down 0.03 percent.