BEIJING • China's exports and imports fell more than expected in June in the latest poor indicator for the world's second-largest economy.

Exports fell 4.8 per cent year- on-year in dollar terms in June as global demand remained stubbornly weak. Adding to Bejing's woes is Britain's decision to leave the European Union, which clouds the outlook for one of Beijing's biggest markets.

Imports also shrank more than forecast to 8.4 per cent, suggesting the impact of a flurry of measures to stimulate growth in country may be fading, after encouraging readings in May.

The monthly trade surplus jumped to US$48.1 billion (S$65 billion). As the world's biggest trader in goods, China is crucial to the global economy and its performance affects partners from Australia to Zambia, which have been battered by its slowing growth - while it faces headwinds itself in key developed markets.

Its imports have been shrinking since late 2014 as the country's once blistering expansion lost steam, slowed down by manufacturing overcapacity, a slowing property market and mounting debt. June's decline - the 20th straight month of falls - came after a surprise rebound in May that suggested demand was strengthening.

The lower imports were attributed to weakening commodity prices. "The input volume of major bulk commodities such as iron ore, crude oil and copper maintained growth," said a statement from the Chinese Customs administration. "The prices of major import commodities remained low with a narrowing price decline."

China imports and exports both fell in the first half of the year, by 10.2 per cent and 7.7 per cent respectively.

A falling yuan currency in recent weeks could give further support to China's manufacturing against foreign competitors. But uncertainties over Britain's exit from the European Union, expected US interest rate hikes, terrorist threats and weak global demand weighed on trade prospects, Customs spokesman Huang Songping told reporters.

Exports faced large downward pressures in the third quarter, he said. "The domestic economy has been operating steadily but downward pressures have continued to increase. Companies' costs have remained high and some industries and orders have been shifted abroad."

The lack of demand will constrain the authorities to "retain an easing bias in domestic policy", Bloomberg Intelligence economists Tom Orlik and Fielding Chen said in a note reported by Bloomberg News.

"Yuan weakness has bolstered competitiveness and prevented a sharper slide in overseas sales," they added.

But analysts with ANZ Research said they did not expect the central bank to push the currency lower in a competitive devaluation because the authorities were "more willing" to allow the yuan to be dictated by market forces.

The prospects for China's export sector are "relatively bleak", China economist for The Economist Intelligence Unit Yue Su, said, due to uncertainty in the European Union, China's largest export market, and an anticipated further drop in US demand due to rising interest rates.

REUTERS, AGENCE FRANCE-PRESSE