Imports cut China's trade surplus

Rising prices are also expected to impact demand for Chinese goods

Rising imports caused China's trade surplus to fall 10.8% in the first three months of 2008, compared with the previous year.

The value of Chinese goods exported also rose, despite the economies of its biggest trade partners, Europe and the United States, slowing.

This meant China exported $41.4bn (£21bn) more than it imported between January and March.

But economists expect Chinese exports to begin to slow later this year.

"If you look at exports to the United States in the first quarter, the weakening external demand is just obvious," Qiu Gaoging, an economist with Shanghai's Bank of Communications said.

"We still expect a significant slowdown in exports in 2008," he said.

Increasing labour costs and the rise in the value of the yuan are also expected to have an effect on demand for Chinese goods from overseas.