China’s trade surplus with US hits record as exporters rush to beat tariffs

BEIJING-Agence France-Presse

China’s surplus with the United States hit a record last month, data showed on July 13, adding to brewing tensions between the economic superpowers as they stand on the brink of an all-out trade war that Beijing warned would have a “negative impact” globally.

The figures come after the two sides exchanged tit for tat tariffs on billions of dollars worth of goods and Donald Trump threatened to up the ante with measures on a colossal $200 billion of Chinese imports.

Beijing said China’s surplus with the U.S. hit an all-time high $28.97 billion last month, while exports to the country hit a record $42.62 billion.

Over the first six months of the year the surplus climbed to $133.8 billion as total two-way trade continued to expand despite the face-off.

The imbalance is at the heart of Trump’s anger at what he describes as Beijing’s unfair trade practices that are hurting American companies and destroying jobs.

But in a statement from its commerce ministry on July 12, China blamed those problems on the U.S., saying the imbalance was “overestimated” and caused by America’s own “domestic structural problems.”

On July 6, Trump rolled out 25 percent tariffs on $34 billion of Chinese goods, prompting Beijing to accuse Washington of launching the “largest trade war” in economic history, while immediately matching the U.S. tariffs dollar for dollar.

“This trade dispute will definitely have an impact on China-US trade and will have a very negative impact on global trade,” said customs administration spokesman Huang Songping at a briefing on July 13.

China’s commerce ministry has said the two sides are not discussing restarting trade negotiations, and renewed its pledge to “strike back” against Washington’s latest threat to slap $200 billion of Chinese imports with new 10 percent taxes.

Trump’s latest tariffs threat hammered global markets, while there are worries that his decision to pick fights with other key allies including Canada and the European Union could fuel an all-out global trade war.

The spiraling 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.

“Looking ahead, export growth will cool in the coming months as US tariffs start to bite alongside a broader softening in global demand,” said Julian Evans-Pritchard of Capital Economics.

Beijing will back away from its war on debt and roll out policy easing measures, predicted China economist at Nomura investment bank Ting Lu, as it faces potential trade war fallout and a domestic slowdown proving to be worse than expected.

“We expect (economic) growth to slow noticeably” in the second half, he said in a research note.

China’s total exports rose 11.3 percent year-on-year in June, beating a Bloomberg News forecast of 9.5 percent, while imports increased 14.1 percent, below the forecast 21.3 percent.

“There will be challenges facing foreign trade with rising instabilities and uncertainties in the global environment,” said Huang.