China-US trade sur­plus hits record

Gulf Times Business - - FRONT PAGE -

China’s trade sur­plus with the United States bal­looned to a record $34.1bn in Septem­ber, de­spite a raft of US tar­iffs, of­fi­cial data showed yes­ter­day, adding fuel to the fire of a wors­en­ing trade war.

Re­la­tions be­tween the world’s two largest economies have soured sharply this year, with US Pres­i­dent Don­ald Trump vow­ing on Thurs­day to in­flict eco­nomic pain on China if it does not blink.

The two coun­tries im­posed new tar­iffs on a mas­sive amount of each other’s goods mid-Septem­ber, with the US tar­get­ing $200bn in Chi­nese im­ports and Bei­jing fir­ing back at $60bn worth of US goods.

“China-US trade fric­tion has caused trou­ble and pounded our for­eign trade devel­op­ment,” cus­toms spokesman Li Kui­wen told re­porters yes­ter­day.

But China’s trade sur­plus with the US grew 10% in Septem­ber from a record $31bn in Au­gust, ac­cord­ing to China’s cus­toms ad­min­is­tra­tion.

It was a 22% jump from the same month last year.

China’s ex­ports to the US rose to $46.7bn while im­ports slumped to $12.6bn.

China’s over­all trade – what it buys and sells with all coun­tries in­clud­ing the US – logged a $31.7bn sur­plus, as ex­ports rose faster than im­ports.

Ex­ports jumped 14.5% for Septem­ber on-year, beat­ing fore­casts from an­a­lysts polled by Bloomberg News, while im­ports rose 14.3% on-year.

While the data showed China’s trade re­mained strong for the month, an­a­lysts fore­cast the trade war will start to hurt in com­ing months.

China’s ex­port jump for the month sug­gests ex­porters were ship­ping goods early to beat the lat­est tar­iffs, said ANZ’s China econ­o­mist Betty Wang, cit­ing the bounce in elec­tri­cal ma­chin­ery ex­ports, much of which faced the loom­ing du­ties.

“We will watch for down­side risks to China’s ex­ports” in the fourth quar­ter, Wang said.

An­a­lysts say a sharp de­pre­ci­a­tion of the yuan has also helped China weather the tar­iffs by mak­ing its ex­ports cheaper. “The big pic­ture is the Chi­nese ex­ports have so far held up well in the face of es­ca­lat­ing trade ten­sions and cool­ing global growth, most likely thanks to the com­pet­i­tive­ness boost pro­vided by a weaker ren­minbi (yuan),” said Ju­lian Evans-Pritchard, China econ­o­mist at Cap­i­tal Eco­nom­ics.

“With global growth likely to cool fur­ther in the com­ing quar­ters and US tar­iffs set to be­come more pun­ish­ing, the re­cent re­silience of ex­ports is un­likely to be sus­tained,” he said.

Trump ac­cused China of think­ing Amer­i­cans are “stupid” and boasted that his tar­iffs had al­ready “had a big im­pact” on China’s stum­bling econ­omy in a Thurs­day in­ter­view on Fox News.

“I have a lot more to do if I want to do it. I don’t want to do it but they have to come to the ta­ble,” he warned.

The yuan has fallen for weeks against the US dollar, drop­ping 9% in the past six months, which mit­i­gates the rise in the price of Chi­nese goods caused by puni­tive US tar­iffs.

US Trea­sury Sec­re­tary Steven Mnuchin – in com­ments pub­lished in the Fi­nan­cial Times this week – warned China against en­gag­ing in com­pet­i­tive cur­rency de­val­u­a­tions.

China has stead­fastly de­nied that it has ma­nip­u­lated the yuan to cope with the tar­iffs.

The US dollar has strength­ened against a range of cur­ren­cies this year as Amer­i­can in­ter­est rates have risen.

China’s stock mar­ket has plunged this year but the trade war has also started to erode Trump’s oft-touted US stock gains, with the Dow Jones In­dus­trial Av­er­age down more than 5% for the week.

The In­ter­na­tional Mon­e­tary Fund this week cited the trade war as it low­ered its 2019 growth fore­cast for China, which is set to see its slow­est ex­pan­sion since 1990.

The IMF also low­ered es­ti­mates for the United States and the global econ­omy as a whole.

A truck trans­ports a ship­ping con­tainer at Qing­dao port in Shan­dong province. China’s ex­ports to the US rose to $46.7bn while im­ports slumped to $12.6bn in Septem­ber.

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