Chinese exporters see record drop

Demand for Chinese goods almost collapsed last year

Chinese exports have dropped by a record amount in May as demand for its goods from the US and Europe slumped.

Exports fell 26.4% from the same month earlier, more than February's previous record drop.

As the downturn has also affected China, and its imports have also declined. They dropped by 25.2% in May.

As a result, China's trade surplus, the difference between what it exports and imports, narrowed by 33% to $13.4bn from the same month last year.

This might mean that the politically sensitive trade gap with the US has narrowed.

China did not report separate figures for its US trade, but the US figures for the previous month showed the trade gap was still growing.

On Wednesday, the US said its trade deficit has widened for the second straight month in April. The deficit with China widened by 7.3% to $16.8bn.

In the past, the US has accused China of boosting exports by keeping its currency, the yuan, artificially low.

Separately, a state news agency said that China's investment in fixed assets - such as factories and real estate - surged 32.9% in the first five months of the year from the same period last year.

The government has begun spending some of its $586bn stimulus package announced last December to boost domestic demand as exports dropped.