China’s trade sur­plus with U.S. hits a record

Year-to-date tops $225B, a re­buke to U.S. tar­iff strat­egy.

Dayton Daily News - - NATION & WORLD - By Anna Fi­field

China’s trade sur­plus BEI­JING — with the United States hit a new record last month, de­fy­ing for now, at least

Pres­i­dent Don­ald Trump’s — pre­dic­tions that tar­iffs would help re­dress the trade im­bal­ance.

Although econ­o­mists ex­pect the Amer­i­can tar­iffs to even­tu­ally have an im­pact, the trade sta­tis­tics re­in­force the widely held no­tion here that there will be no quick end to the trade war be­tween Wash­ing­ton and Bei­jing.

“It’s ob­vi­ous that the im­me­di­ate ef­fects of the trade war are the ex­act op­po­site of what the Trump ad­min­is­tra­tion had been plan­ning,” said An­drew Polk of Triv­ium China, a Bei­jing-based eco­nom­ics re­search firm.

“We ex­pect the dy­namic to change once we get a bit deeper into this, but for now China is try­ing to out­run the next round of tar­iffs,” he said.

China en­joyed a record high $34.1 bil­lion trade sur­plus with the U.S. in Septem­ber, tak­ing the sur­plus for the year to date to $225.8 bil­lion, ac­cord­ing to Chi­nese sta­tis­tics re­leased Fri­day. That’s sig­nif­i­cantly higher than the $196 bil­lion recorded be­tween Jan­uary and Septem­ber last year.

The in­crease, the re­sult of both in­creas­ing ex­ports from China to the U.S. — up 14.5 per­cent from the same month last year — and a de­cline in the goods that China is buy­ing from the U.S.

The di­rect im­pact and in­di­rect im­pact of the on­go­ing trade fric­tions is “gen­er­ally con­trol­lable,” Cus­toms de­part­ment spokesman Li Kui­wen said Fri­day. But global trade would con­tinue to face chal­lenges as the U.S.-China trade fric­tions “have been es­ca­lat­ing and other un­sta­ble fac­tors still ex­ist caused by a num­ber of eco­nomic un­cer­tain­ties world­wide,” he said.

The sec­ond round of tar­iffs that the Trump ad­min­is­tra­tion im­posed on China came into ef­fect only Sept. 24, so the in­crease in ex­ports last month might have been the re­sult of Chi­nese com­pa­nies rush­ing to sell their prod­ucts be­fore the ad­di­tional du­ties were added.

Af­ter im­pos­ing tar­iffs on $50 bil­lion worth of Chi­nese goods over the sum­mer, the ad­min­is­tra­tion last month added a 10 per­cent tar­iff to an­other $200 bil­lion worth of Chi­nese prod­ucts, en­com­pass­ing ev­ery­thing from house­hold items such as fur­ni­ture and toys to in­dus­trial equip­ment.

The tar­iffs are set to rise to 25 per­cent in Jan­uary if the trade dis­pute is not re­solved by then, and Trump has vowed to im­pose tar­iffs on the re­main­ing $267 bil­lion worth of Chi­nese im­ports.

China re­tal­i­ated last month by putting tar­iffs rang­ing from 5 to 10 per­cent on $60 bil­lion worth of Amer­i­can goods, com­ing into ef­fect the same day as the Amer­i­can mea­sures.

But it was still too early to see the im­pact of the tar­iffs, said Ju­lian Evans-Pritchard, China econ­o­mist at Cap­i­tal Eco­nom­ics, a con­sul­tancy.

“The way the U.S. has struc­tured the tar­iffs en­cour­ages front­load­ing be­cause firms that know they’re go­ing to hit with tar­iffs would rather pay 10 per­cent than 25 per­cent,” he said.

Plus, the 10 per­cent tar­iffs were al­most en­tirely off­set by the fall in the Chi­nese cur­rency, which has de­pre­ci­ated by more than 8 per­cent since June. This makes Chi­nese prod­ucts cheaper over­seas.

Trump should take no­tice of the sta­tis­tics, said Huo Jian­guo, a trade ex­pert at the Cen­ter for China and Glob­al­iza­tion in Bei­jing.

“He won’t be happy with these fig­ures but it proves that tar­iffs don’t help curb ex­ports,” Huo said. “Both sides need to find a way to talk and make some other ar­range­ments.”

Trump and Chi­nese pres­i­dent Xi Jin­ping have agreed to meet next month at the G-20 sum­mit in Buenos Aires, in hopes of re­solv­ing their in­ten­si­fy­ing trade con­flict.

Trump said Thurs­day that his tar­iff strat­egy was work­ing. “It’s had a big im­pact,” Trump said in an in­ter­view with “Fox & Friends.”

“Their econ­omy has gone down very sub­stan­tially and I have a lot more to do if I want to do it,” he said.

But China has been stand­ing firm, re­peat­edly say­ing that the only so­lu­tion was through ne­go­ti­a­tion and com­pro­mise on both sides.

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