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China’s trade surplus with US hits new record

International Business
Sat, 08 Sep 2018

BEIJING: China’s trade surplus with the US widened to a record in August even as the country’s export growth slowed slightly, an outcome that could push President Donald Trump to turn up the heat on Beijing in their cantankerous trade dispute.

The politically sensitive surplus hit $31.05 billion in August, up from $28.09bn in July, customs data showed yesterday, surpassing the previous record set in June.

Over the first eight months of the year, China’s surplus with its largest export market has risen nearly 15 per cent, adding to tensions in the trade relationship between the world’s two largest economies.

China’s annual export growth in August moderated slightly to 9.8pc, the data showed, the weakest rate since March but only slightly below recent trends.

The number missed analysts’ forecasts that shipments from the world’s largest exporter would rise 10.1pc, slowing only slightly from 12.2pc in July.

Even with US tariffs targeting $50bn of Chinese exports in effect for their first full month in August, China’s exports to the US still accelerated, growing 13.2pc from a year earlier from 11.2pc in July.

“There is still an impact from front-loading of exports, but the main reason (for still-solid export growth) is strong growth in the US economy,” said Zhang Yi, an economist at Zhonghai Shengrong Capital Management.

Zhang said the impact from US tariffs on China’s exports would likely be limited over the next few months.

China’s imports from the US grew only 2.7pc in August, a slowdown from 11.1pc in July.

The world’s largest trading nation got off to a strong start this year, but its economic outlook is being clouded by the rapidly escalating US trade dispute and cooling domestic demand.

Trump upped the ante on Friday, warning he was ready to slap tariffs on nearly all Chinese imports to the US, threatening duties on another $267bn of goods on top of $200bn in imports primed for levies in coming days.

Washington has long criticised China’s huge trade surplus with the US and has demanded Beijing reduce it. Still, disagreements between the two major economic powers run deeper than just the trade balance and tensions remain over limits on US firms’ access to Chinese markets, intellectual property protection, technology transfers and investment.

Imports, a key gauge of the strength of China’s domestic demand, grew 20pc, beating forecasts. Analysts had expected growth of 18.7pc, slowing from July’s surprisingly high 27.3pc.

That resulted in China posting a smaller overall trade surplus of $27.91bn for the month. Analysts had expected the surplus would rise to $31.79bn from $28.05bn in July.

The surplus with the US was larger than China’s net surplus for the month, indicating China would be running a deficit if trade with the world’s largest economy was excluded.

While no one predicted a sudden, sharp blow from US tariffs, China’s official export data has been surprisingly resilient so far, with growth exceeding analysts’ expectations for five months in a row.

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