US President Donald Trump and Chinese President Xi Jinping, right, arrive for a meeting on the sidelines of the G-20 Summit in Hamburg, Germany, Saturday, July 8, 2017. Saul Loeb/Pool Photo via AP

China's trade surplus narrowed in May, driven lower by a surge in imports.

According to China's National Bureau of Statistics (NBS), a trade surplus of $24.92 billion was recorded in May, down from $28.78 billion a month earlier.

Markets were looking for an increase to $31.9 billion.

Despite the narrowing in the headline surplus, the surplus with the United States went in the other direction, lifting to $24.58 billion from $22.15 billion a month earlier.

One suspects that trade tensions between the US and China are unlikely to dissipate on the news.

BIAUS

Helping to explain the decline in the headline surplus, the NBS said the value of imports grew substantially faster than exports over the year.

Imports surged by 26% over the year, an acceleration on the 21.5% increase seen in the 12 months to April.

The increase was substantially faster than the 18.7% lift expected by economists, reflecting both stronger demand from within China along with higher raw materials prices.

In contrast to acceleration seen in imports, export growth slowed fractionally, falling to 12.6% from 12.9% in the year to April.

That was still above the 10% increase that had been expected by economists, providing another indicator of the improvement seen in the global economy over the past year.

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