China's trade surplus decreased in May as import prices of crude oil and other raw materials rose significantly.
The latest report from the General Administration of Customs showed Wednesday that China's monthly trade surplus dropped 10% year-on-year to US$20.2 billion in May. Economists had expected a surplus of US$21.3 billion. Yet, it is higher compared to US$16.7 billion surplus in April.
In May, exports rose 28.1% year-on-year to US$120.49 billion, faster than the consensus forecast of 20% growth. In the previous month, exports were up 21.9%.
On the other hand, imports swelled 40% to US$100.3 billion, while expectation was for a 27.8% increase. The growth pace is quicker compared to 26.4% recorded in the month before.
Exports of manufactured goods remained strong in May, while weakness was observed in textiles and other industries.
China's total trade volume in the first five months was US$1,012.08 billion, an increase of 26.2% year-on-year. Trade surplus during the period narrowed 9% year-on-year.
China's export to the U.S. grew 9.1% year-on-year to US$21.2 billion and imports from the U.S. jumped 26.3% to US$6.9 billion. Hence, the trade balance was a surplus of US$14.3 billion in May, up from US$12.6 billion in the same month a year ago.
Trade surplus with the EU increased 28% to US$12.7 billion from US$9.9 billion in the previous year. However, trade with Japan was a deficit nearly doubled to US$3.1 billion.
Earlier in the day, National Bureau of Statistics reported that China's index for producer prices, an indicator for inflation, jumped 8.2% year-over-year in May due to higher costs for crude oil and other raw materials. The current growth pace is the fastest in more than three years.
The People's Bank of China on Saturday ordered banks to set aside more money as reserves, as part of its efforts to curb inflation. The reserve ratio will rise 0.5% next week and increase another 0.5% on June 25 to a record 17.5%. This is the fifth time this year that the central bank has raised the reserve ratio.
Reports said citing sources that consumer prices rose 7.7% year-on-year in May, slower that 8.5% recorded in April. The government is scheduled to release exact figures on June 12.
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