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

BEIJING: China’s trade surplus with the United States 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 US$31.05 billion in August, up from US$28.09 billion in July and 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 9.8 per cent, customs data showed yesterday, 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 per cent, slowing only slightly from 12.2 per cent 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.

Investors fear Washington could impose duties on another US$200 billion of Chinese imports at any time, in what would be its most sweeping measures yet, and Beijing has vowed to once again retaliate.

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

Washington has long criticised China’s huge trade surplus with the United States 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 domestic demand, grew 20 per cent, beating forecasts. Analysts had expected growth of 18.7 per cent, slowing from July’s surprisingly high 27.3 per cent.

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