China's economy, the world's second largest, struggled in July with a worse-than-expected trade performance as imports plunged 12.5 percent year-on-year, Customs said yesterday. Imports fell to $132.4 billion, data showed, as weaker global commodity prices and lacklustre domestic demand weighed on purchases. The drop in imports was significantly larger than expectations for a 7.0 percent fall, the median forecast in a survey of economists by Bloomberg News.Exports also fell in US dollar terms, dropping 4.4 percent to $184.7 billion - compared with expectations of a 3.5 percent decline. As the world's biggest trader in goods, China is crucial to the global economy and its performance affects partners from Australia to Zambia, which have been battered by its slowing growth - while it faces headwinds itself in key developed markets.July was the fourth month in a row that exports declined in dollar terms, and analysts described the figures as disappointing."Signs of stronger manufacturing activity among many of China's key trading partners has so far failed to lift export growth," China economist for Capital Economics, Julian Evans-Pritchard, said in a research note."At the same time, the renewed fall in global commodity prices is dragging down import growth," he said. China's imports have been shrinking since late 2014 with global raw material costs hammered as the country's once blistering expansion lost steam, hurt by manufacturing overcapacity, a slowing property market and mounting debt. July saw imports fall by the most since February, when they lost 13.8 percent."China's trade data was unimpressive in July," ANZ Banking Group said in a research note, which added the outlook for the second half of the year was "challenging"."Over H2 2016, sluggish growth in Europe and Japan is likely to drag on China's exports. Brexit will further weighon exports to the EU," it said, referring to Britain's vote to leave the European Union. In the first seven months of the year, total trade volume with the EU - China's biggest trading partner - rose 1.8 percent, Customs said in a statement. Trade with Japan was up just 0.8 percent, but it fell 4.8 percent with the United States, data showed.China is embroiled in rows over steel exports - it produces around half the world's output of the metal - with the EU and U.S. accusing it of dumping. It exported 10.3 million tons of steel in July, Customs said, up 5.86 percent year-on-year but down 5.85 percent on June. But stock investors ignored the weak trade performance, with the benchmark Shanghai Composite index closing up nearly one percent yesterday. July's fall in exports came despite weakness in China's yuan currency - also known as the renminbi (RMB) - which has helped overseas sales by making Chinese goods cheaper.China's foreign exchange reserves, already the world's largest, stood at $3.2 trillion in July, down by just $4.1 billion from June, official figures showed Sunday.