China’s record trade surplus with US adds fuel to tariff war

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 $28.09 bn in July, customs data showed on Saturday, 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%, adding to tensions in the trade relationship between the world’s two largest economies. China’s annual export growth in August moderated slightly to 9.8%, 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 10.1%, slowing only slightly from 12.2% in July.

Even with US tariffs targeting $50 bn of Chinese exports in effect for their first full month in August, China’s exports to the US still accelerated, growing 13.2% from a year earlier from 11.2% 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 2.7% in August, a slowdown from 11.1% 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 $267 bn.