China trade data to show solid domestic demand

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Improvements in China's economy likely led to double-digit import growth and a steady pickup in exports in August, data due out Sunday is expected to show.

Imports gained 11.3 percent last month, according to a Reuters poll, following July's 10.9 percent rise, as recent stimulus measures in Beijing continued to drive a recovery in domestic demand.

(Read more: China's trade data surge past expectations)

"Imports of commodities are rising as companies in the infrastructure space are getting ready to implement recent stimulus measures," Dariusz Kowalczyk, senior economist and strategist of Asia ex-Japan at Credit Agricole told CNBC. He estimates imports rose 15 percent in August, well above market expectations.

In late-July, the government introduced a growth-supportive policy package, which included increased spending on social housing and the construction of railways.

Meanwhile, exports are forecast to have risen 6 percent in August, according to Reuters, after a 5.1 percent increase in July.

The subdued external demand environment is limiting the growth of outbound shipments as emerging markets slow and the U.S. and European economies pick up at a moderate pace, economists say.

(Read more: China PMIs impress but analysts warn of risks ahead)

"The export situation remains tough, given the uneven global recovery," Alistair Chan, economist at Moody's Analytics wrote in a note this week.

The twin Purchasing Managers Indexes (PMI) showed a mixed external demand picture for August; the official new export orders sub-index rose to 50.2 from 49.0 in July, while HSBC's sub-index dipped further into contractionary territory to 46.5 from 47.7. The key 50 threshold demarcates expansion from contraction.

(Read more: Goldman upgrades China growth, cuts India outlook)

Yet, the overall improvement in China's economic data in recent weeks has prompted the likes of Goldman Sachs to upgrade its 2013 growth outlook. The U.S. bank this week raised its gross domestic product (GDP) growth estimate to 7.6 percent from 7.4 percent previously.

—By CNBC's Ansuya Harjani; Follow her on Twitter @Ansuya_H