China's trade surplus shot up to US$31.48 billion  in July from June's US$22.27 billion, hitting the highest level in more than two years, the General Administration of Customs (GAC) said on Wednesday.

Exports rose 20.4 percent year-on-year to reach US$175.128 billion in July, compared with 17.9 percent in June.

Imports increased 22.9 percent from a year ago to US$143.64 billion, faster than June's 19.3 percent increase

The figure beat previous forecast, signalling China's economy outlook is better than investors have predicted against the backdrop of US rating downgrade, said Australia & New Zealand Banking Group in its report.

The report also said China will run at a high level trade surplus in the coming months.