The slowdown in China's foreign trade growth in May was mainly caused by continuous yuan appreciation and sluggish overseas demand, the Ministry of Commerce said Tuesday.

Recent customs data showed that China's exports grew by only 1 percent year-on-year in May, down from the 14.7 percent increase in April, while imports fell by 0.3 percent in May compared with a 16.8 percent rise in April.

Analysts attributed the slowdown to a tightening of foreign exchange and trade rules in order to curb arbitrage between the Chinese mainland and Hong Kong. But ministry spokesman Shen Danyang said appreciation of the yuan and the global trade downturn played a bigger role.

The mainland's exports to places excluding Hong Kong rose by 8.5 percent year-on-year in the first four months, but they fell by 0.12 percent year-on-year in May, Shen told reporters Tuesday at a news briefing in Beijing.

In a recent survey of 1,015 companies by the ministry, 73.4 percent believed that yuan appreciation was the main reason for sluggish exports and 72.6 percent blamed weak overseas demand, Shen said. 

Before a slight depreciation Tuesday, the yuan's central parity rate against the US dollar rose to 6.1598 Monday, the 22nd record high since April 1. The ministry's survey showed 85.5 percent of respondents expressed hopes for a stable yuan exchange rate.

As a result of the yuan appreciation, exporters' orders and profit margins have narrowed and many companies are now afraid of accepting long-term orders, the ministry's survey showed.

The yuan appreciation is expected to continue for some time, said Zhang Jianping, a research fellow at the Academy of Macroeconomic Research.

Besides the quantitative easing by the US and Japan, economies such as India, Australia and the EU announced interest rate cuts in May, which has increased appreciation pressure for the yuan.

Shen urged all economies to reduce the negative spillover effect of their monetary policies.

Sluggish global demand is another reason behind China's slow export growth, Shen said.

The growth in China's trade from January to April benefited from policies launched last year and the recovery of some overseas markets, but these favorable factors have basically disappeared in May, Shen said, noting that China faces a grim outlook for trade for the rest of the year.

Zhang said domestic firms can settle trade in the yuan with companies from economies that have signed currency swap deals with China, such as Russia, so as to avoid the effect of yuan appreciation.

Domestic companies can also expand their markets in developing countries while stabilizing their trade with Europe and the US, Zhang said.

If China's foreign trade with developed markets, which accounts for more than half of the total, can remain stable, the trade situation throughout the year is expected to be slightly better than 2012, he said.