China's imports and exports of diamonds hit a record high of 610 million U.S. dollars in 2006, jumping 44.4 percent year on year.

The Shanghai Diamond Exchange revealed the figure in its latest report, attributing the surge to the country's tax cut on diamond imports last year. The figure excludes volumes for the processing trade.

On July 1, 2006, China scrapped value added tax on imported rough diamonds, and lowered the tax rate on imported refined diamonds from 17 percent to 4 percent.

In the latter half of 2006, China's refined diamond imports jumped 194 percent year on year to 147 million U.S. dollars, according to the Shanghai Diamond Exchange.

The bourse is now the only channel by which commonly-traded diamonds can legally flow in and out of China.

In 2006, the Shanghai Diamond Exchange collected value added tax of 131 million yuan (16.8 million U.S. dollars) on imported diamonds, slightly lower than that in 2005, figures show.