China posted a record monthly trade surplus of €18 billion in October, but the total as released yesterday was lower than the €20 billion forecast, suggesting that policies to restrain exports and promote imports might be making a difference.

The softening trade figures will come as some relief to the Chinese authorities, who are under growing pressure from the EU and the US to address the imbalance.

Last month, Chinese exports grew 22.3 per cent from a year earlier, with imports up 25.5 per cent.

A top think-tank, the State Information Centre (SIC), which operates under the auspices of the National Development and Reform Commission (NDRC), said tightening efforts would translate into slower than expected GDP growth at 11.2 per cent in the fourth quarter.

China's buoyant economy is clearly driving a consumer boom, especially in the big cities of the eastern seaboard and Beijing. The SIC report said consumption would remain healthy in the fourth quarter, the result of rising incomes and strong economic growth.

GDP growth was expected to hit 11.4 per cent for the whole of 2007, the fifth consecutive year of double-digit growth, slightly below the 11.5 per cent increase registered in the first three quarters of the year, the report said.

This is a busy time for China's factories, filling the orders for Christmas, but October was the first month that exports grew more slowly than imports since March.

Despite some signs of easing, inflation remains a major headache for the government, which is struggling to battle a widening wealth gap and is wary of the politically destabilising effects of rising prices. Rising grain prices remain a pressure, while industrial prices could face rising pressure from recent surges in world crude oil prices.

Consumer price inflation (CPI) is expected to ease to 5.9 per cent in the fourth quarter from 6.1 per cent during the third quarter, which would give a full-year figure at about 4.6 per cent.

CPI hit an 11-year high of more than 6 per cent in August. A key issue was the rising price of pork and eggs, which appear to have stabilised following government intervention to stop food price hikes and subsidies offered to pig breeders.