China trade surplus with United States hits historic high & timing couldn’t be worse

Friday, 13 Jul, 2018

Official data shows China's monthly trade surplus with the U.S. was almost 29-billion-dollars.

Trump, who has demanded Beijing cut the trade surplus, could use the latest result to further ratchet up pressure on China after both sides last week imposed tit-for-tat tariffs on $34 billion of each other's goods.

China's June trade grew by double digits amid mounting tensions with Washington but Beijing warned its exporters to face "rising instabilities and uncertainties".

China's trade surplus with the USA widened to a record in June, risking further escalation of a a bitter trade dispute with Washington.

This week, Washington threatened to impose 10% tariffs on another $200bn of Chinese imports.

The difference between China's exports to the USA and its imports from the world's largest economy expanded to a monthly high of $29bn (£22bn), up from $24.6bn in May.

The dispute has jolted global financial markets, raising worries a full-scale trade war could derail the world economy.

Earlier this week Donald Trump proposed a 10% tariff on $200bn of Chinese goods entering the United States, saying that tariffs already in place on steel and aluminium imports and $34bn of goods had failed to force significant reforms by Beijing.

"Looking ahead, export growth will cool in the coming months as U.S. tariffs start to bite alongside a broader softening in global demand", Capital Economics analyst Julian Evans-Pritchard said in a statement.

However, a lower yuan would make it more expensive for China to import U.S. goods. Imports expanded by 14.1 per cent to $175.1 billion, down from the previous month's 26 per cent.

Investors fear a prolonged trade battle with the United States could harm business confidence and investment, disrupting global supply chains and harming growth in China and the rest of the world.

In the first half of the year, Chinese exports to the USA increased 13.6 percent as compared to the same period in 2017, while imports from the US only rose 11.8 percent.

Growth in imports for June showed a moderate slowdown from May, official data showed on Friday. "Not only will Chinese exporters suffer but American consumers as well", she said.

The spiralling battle with Beijing shows no signs of cooling down, and observers warn the impact will begin to hurt soon as China's economy struggles with slowing growth just as leaders try to battle a worryingly large debt mountain.

However, analysts said the June figures were a sign that exporters rushed to beat the initial tranche of tariffs, which came into effect in the first week of July.