China’s US trade surplus expands
Export growth expected to cool as tariffs start to bite
trade surplus with the United States swelled to a record in June as its overall exports grew at a solid pace, a result that could further inflame a bitter trade dispute with Washington.
But signs exporters were rushing shipments before tariffs went into effect in the first week of July suggest the spike in the surplus was a one-off, with analysts expecting a less favourable trade balance for China in coming months as duties on exports start to bite.
The data came after the administration of US President Donald Trump raised the stakes in its trade row with China on Tuesday, saying it would slap 10% tariffs on an extra $200 billion worth of Chinese imports, including numerous consumer items.
China’s trade surplus with the United States, which is at the centre of the tariff tussle, widened to a record monthly high of $28.97 billion, up from $24.58 billion in May, according to Reuters calculations based on official data going back to 2008.
“The record surplus won’t help already sour relations and escalating tensions,” Jonas Short, head of the Beijing office at Everbright Sun Hung Kai, wrote in a note.
Trump, who has demanded Beijing cut the trade surplus, could use the latest result to further ratchet up pressure on China after both sides last week imposed tit-for-tat tariffs on $34 billion of each other’s goods.
Washington has warned it may ultimately impose tariffs on more than $500 billion worth of Chinese goods — nearly the total amount of US imports from China last year.
China’s June exports rose 11.3% from a year earlier, China General Administration of Customs reported, beating forecasts for a 10% increase according to the latest Reuters poll of 39 analysts, and down from a 12.6% gain in May.
China’s Commerce Ministry confirmed last month that Chinese exporters were front-loading exports to the US to get ahead of expected tariffs — a situation that could exacerbate any slowdown in shipments toward the year-end.
“Looking ahead, export growth will cool in the coming months as US tariffs start to bite alongside a broader softening in global demand,” Julian Evans-Pritchard, Senior China Economist at Capital Economics in Singapore wrote in a note, though he noted a weaker yuan should help offset some of the decline.
China’s exports to the United States rose 13.6% in the first half of 2018 from a year earlier, while its imports from the US rose 11.8% in the same period.
Separate data suggested some Chinese retailers moved up orders to the US to insulate themselves from the intensifying trade war that threatens to send up costs on a growing number of consumer products.
For January-June China’s trade surplus with the United States rose to $133.76 billion, compared with about $117.51 billion in the same period last year.
After a strong start to the year, growth in China’s exports has moderated recently, and is expected to face more pressure from the initial round of US tariffs.
Imports grew 14.1% in June, missing analysts’ forecast of a 20.8% growth, and compared with a 26% rise in May.
Separate customs data yesterday showed imports of commodities from soybeans to crude oil eased compared with a year ago, but China’s steel mills and aluminium smelters sold much more abroad spurred by higher international prices amid growing concerns about slowing demand growth.
The data could renew longstanding criticism from the United States and Europe that the world’s top metal producer is selling its surplus product abroad, hurting foreign rivals.