Coronavirus: COVID continues to impact China's trade balance

Workers load and unload wheat at the wharf of the National Grain Reserve and transport it to the warehouse through grain conveyor, Taizhou City, Jiangsu Province, China. Photo: Costfoto/Barcroft Media via Getty Images

China's trade surplus surged as exports fell less than expected in May, boosted by sales of medical supplies, while a sharp fall in imports indicated pressure on manufacturers.

Overseas shipments in May fell 3.3% from a year earlier, beating economists’ expectations. A Reuters poll had forecast a 7% drop.

Exports were helped to an extent by sales of medical supplies including masks as countries look to stem the spread of the coronavirus.

Imports fell 16.7% compared with a year earlier, marking the sharpest decline since January 2016. Reuters said its poll had forecast a drop of 9.7%.

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“Imports were affected by insufficient domestic demand and commodity price declines," said Wang Jun, chief economist of Zhongyuan Bank.

China posted a record trade surplus of $62.93bn, the highest since Reuters started tracking the series in 1981, and far exceeding the poll's forecast for a $39bn surplus.

Exports to the US fell 1.2% from a year earlier, while those to India slumped 51% and Brazil’s were down 26%, Bloomberg reported. Imports were down 13.5% from the US, 43.5% from Hong Kong and 29% from the European Union.

The gradual recovery of China’s economy could be in jeopardy amid the risk of an escalation in US-China tensions. Most recently, a US senator accused China of trying to block the development of a vaccine in the West.

Chinese officials have released a lengthy report on the nation’s response to the coronavirus pandemic, defending their government’s actions and saying China provided information in a timely and transparent manner.

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