China says domestic demand can't offset export drop

BEIJING, Aug 12 - Government steps to boost domestic demand cannot be expected in the short term to fully offset the impact of reduced demand for Chinese exports, the Ministry of Commerce said on Wednesday.

In a statement released ahead of a news conference, the ministry described the problem of overcapacity in Chinese industry as "pronounced" and said some sectors and companies still faced operational difficulties.

"Currently China's economic recovery trend has become evident, but the global economic outlook is still unclear and China still faces big pressure on declining external demand," the English-language statement said.

The ministry said it would work with other government agencies to try to maintain China's share of global markets.

It reaffirmed Beijing's policy of encouraging local firms to expand overseas and said it would seek to stabilise inflows of foreign direct investment, which have weakened in recent months.