China's export sales unexpectedly rose for the first time in four months in June and imports fell again but posted their best performance this year, causing some optimism tepid trade flows are picking up. Yet hopes were offset by a realisation that China's trade sector had a poor second quarter, with volumes contracting significantly from a year ago, further dragging on an already stuttering Chinese economy. With China set to publish its second-quarter gross domestic product (GDP) data on Wednesday, some analysts warned that lacklustre trade is the precursor for disappointing economic growth. "The soft trade data in the second quarter suggest that China's second quarter GDP will underperform," ANZ economists said in a note, adding that the figure could fall to 6.8 percent from the first quarter's 7.0 percent. Given the headwinds faced by China's economy, analysts polled by Reuters predict growth may have dipped to 6.9 percent between April and June, the weakest performance since the global financial crisis. On Monday, the General Administration of Customs said Chinese exports grew 2.8 percent last month from a year ago, beating forecasts for a 0.2 percent decline. Imports fell for an eighth consecutive month, on a yearly basis, but the 6.1 percent drop was the smallest this year, and much better than the 15.0 decline expected by economists. For June, China had a trade surplus of $46.5 billion, down from May's $59.5 billion. For the first half of 2015, the surplus was $263 billion, more than 2.5 times the figure in the same period last year. Some analysts warned that the pick-up in China's trade in June may not last. "Even though inventories at domestic companies stayed at a relatively low level in May and June, the economic fundamental is weak," said Nie Wen, an analyst at Hwabao Trust. "I doubt imports would continue to improve in the next few months." Surge Needed During the first half of 2015, the total of imports and exports slumped 6.9 percent from a year earlier. This means there would need to be a big second-half surge for China to reach its target of two-way rising 6 percent this year. Still, the improvement in June from previous months was encouraging. Louis Kuijs, an economist at RBS, said he calculated that "normal" Chinese imports in June, means those consumed in the country rather than re-exported, fell 5.3 percent in June from a year ago, while the drop for April-June averaged 14 percent. "This suggests that, after having been very weak in the first 5 months, domestic demand in China improved in June," Kuijs said. China's economy has had a difficult year. Slowing growth in trade, investment and domestic demand has been compounded by a cooling property sector. Worse, investor confidence was rattled in recent weeks by a stock market rout. The customs office said on Monday the crisis in Greece was having "a certain effect" on trade, but also blamed weak external demand in general, rising labour costs and a stronger yuan for the weakness in exports. To boost the economy, China's central bank on June 27 cut lending rates for the fourth time since November and trimmed the amount of cash that some banks must hold as reserves, stepping up efforts to support an economy that is headed for its poorest performance in a quarter century. (Reuters)