Mumbai: China's reliance on foreign trade had exceeded 60 per cent, making the country more sensitive to price changes on international markets and susceptible to imported inflation, according to the National Bureau of Statistics (NBS).

The country's inflationary pressure was mainly driven by price rises for crude oil, foodgrains and iron ore worldwide, according to the NBS. The rocketing crude prices and higher iron ore prices have driven up production costs and product prices, thereby escalating the inflationary pressure, the bureau said.

China imports nearly 50 per cent of its oil requirements despite rocketing crude prices compared to India's crude imports of nearly 70 per cent of its total requirement.

China also imports more than 50 per cent of its iron ore requirements. Iron ore prices have risen year after year - the price was up 71.5 per cent in 2005, up 19 per cent in 2006, up 9.5 per cent in 2007 and up more than 65 per cent in 2008, the bureau pointed out.

Higher iron ore prices have driven up prices of rolled steel and related products, thus escalating the inflationary pressure.

China, which caps domestic prices of petroleum fuels, has suffered refining and distribution losses of 50 billion yuan ($7.3 billion) so far this year, according to the bureau.

China's factory-gate price index rose eight per cent in March, 8.1 per cent in April, 8.2 per cent in May and 8.8 per cent in June. The consumer price index hit a 12-year-high of 8.7 per cent in February, and averaged 7.9 per cent for the first half of this year.

China's trade surplus also fell 17 per cent to $20.25 billion in July -  for a fourth straight month - increasing chances of government measures to sustain economic expansion.

China has eased bank lending norms, raised tax rebates for some exports and halted yuan's gains to help manufacturers and small businesses as the world's fastest- growing major economy shifts gear.

Analysts expect inflation in China to have cooled to the slowest pace in seven months in July, allowing policy makers to put a bigger emphasis on stimulating the economy.