There are signs toy producers are recovering from the downturn at the beginning of the year, but higher technical and safety standards for products demanded by export markets may be working as trade protection.

Guangzhou City customs figures show the province exported US$2.56 billion worth of toy products in the first seven months of this year, down 12.1 per cent year on year. But the decline was two percentage points lower than that in the first half.

Li Zhuoming, executive vice chairman of the Guangdong Toy Association, said toy exports totalled US$600 million in July alone, a monthly high this year after eclipsing June's US$400 million.

"This suggests global demand for China-made Christmas toys is rapidly increasing," he said.

Analysts say the government's decision to increase tax rebates on toy exports from 13 per cent to 15 per cent since June 1st has helped the industry.

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