Several economic indicators reveal a slow-down of China's economy in the past months:

• GDP growth slowed to 10.3% in Q2
• Inflation slowed to 7.3% in June from 7.6% in May
• Trade surplus fell 20% year-on-year in June to US$21.3 billion

The slow-down has been attributed mainly to slowing exports due to reduced global growth and a possible US recession.  However, domestic consumption remains strong and import trends continue to rise.

The continued cooling of the economy could prompt policy makers to re-evaluate tightening measures and focus on sustaining economic growth.  Last week, there were reports on the government's plan to increase tax rebates for textile exports to ease the cost burden on companies.

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