China’s June exports seen solid as trade war heats up
Shipments expected to rise 10%, imports to grow 20.8%
BEIJING: China’s exports growth is expected to have cooled only slightly in June, possibly further boosting a trade surplus with the United States in a test for Beijing as it tries to weather a volley of US tariffs on its goods that many fear could harm its economy.
The Trump administration on Tuesday raised the stakes in its trade dispute with China, saying it would slap 10% tariffs on an extra US$ 200bil worth of Chinese imports, including numerous consumer items.
Washington’s latest move came only days after it imposed 25% tariffs on US$ 34bil of Chinese imports, drawing rapid retaliatory duties by Beijing on the same amount of US exports to China.
All the same, given the most recent round of tit-for-tat tariffs went into effect only tomorrow, there has been little impact on China’s overseas shipments to date.
“All in all, the trade impact of the first round of the tariff should have a very limited impact on China’s exports to the US, with the maximum loss of US$ 5bil,” Alicia Garcia Herrero, chief economist at Natixis Asia Research, wrote in a recent note.
That view was backed by the Reuters poll of 39 economists, which forecast Chinese exports growth of 10% year-on-year in June, cooling slightly from a 12.6% rise in May.
China’s Ministry of Commerce said last week it would encourage exporters to develop new export markets, and would also use funds collected from tariffs to ease the impact from US trade actions on companies.
Imports growth was also expected to remain solid at 20.8% last month, the third straight month of 20-plus percent growth, albeit slowing again from the 26% surge in May.
There is also likely to be considerable focus on the US-China trade balance as US President Donald Trump has railed against China’s sizable surplus with the world’s no. 1 economy and has demanded Beijing take measures to cut it.
The poll showed China’s overall trade sur- plus likely widened to US$ 27.61bil in June from US$2 4.92bil in May. There was no separate forecast on China’s trade surplus with the United States which has continued to grow even as its total surplus has narrowed over the last two years.
China ran a US$ 375bil goods trade surplus with the United States in 2017.
Worryingly, there have been few signs that either Beijing or Washington are prepared to ratchet down the trade frictions.
China said yesterday that the latest US actions were “completely unacceptable” and that it would be forced to respond.
While there have been few signs the trade tussle is having a broader impact so far, ana- lysts expect China’s export growth to slow in the second half of the year and fear that a prolonged row with the US could put an already slowing economy on the skids.
The commerce ministry confirmed last month that Chinese exporters were front-loading shipments to the US to get ahead of expected tariffs – a situation that could exacerbate any slowdown in shipments towards year-end.
“I think Chinese leaders do think they will obviously be hit significantly by all this damage from a trade war but they think they can probably ride it out economically,” said Louis Kuijs, Hong Kong-based head of Asia economics at Oxford Economics.