China’s US trade sur­plus ex­pands

Ex­port growth ex­pected to cool as tar­iffs start to bite


C hina’s

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.

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