China exports top forecasts but warning over US tariffs impact

China today posted a forecast-busting surge in exports for July but while its surplus with the US dipped slightly there was a warning that the full impact of US sanctions was yet to be felt.

The figures come as the world's two largest economies exchange threats of stiff duties on billions of dollars worth of goods, fuelling fears of a full-blown trade conflict that could hit global growth.

Beijing reported a USD 28.1 billion surplus with the US in July, down from the record USD 28.9 billion seen in June. But it was 11 per cent higher than in the same month last year.

China's global trade surplus also fell, from USD 41.5 billion in June to USD 28 billion in July. Exports surged a better-than-expected 12.2 per cent in July, while imports soared 27.3 per cent, also beating estimates.

But the latest readings are unlikely to ease tensions with Donald Trump's administration.

China's gaping trade surplus with the United States has long been a bone of contention, with the president accusing the country of unfair practices, stealing American jobs and thieving its technological know-how.

While July's numbers narrow the gap, the relatively small change will do "little to cool down the escalating trade tensions between the two countries", said Betty Wang, senior China economist at ANZ Research.

The White House on July 6 imposed 25 per cent tariffs on USD 34 billion of Chinese products entering the US, triggering a tit-for-tat response from Beijing. Analysts were split on how much effect the tariffs had on July's reading.

"The impact of tariffs on exports is yet to be reflected. We will see a full-month tariff effect in August," Iris Pang, greater China economist at ING Wholesale Banking in Hong Kong, told Bloomberg News.

But Julian Evans-Pritchard of Capital Economists said: "Shipments to the US did weaken slightly, which hints at some impact from the tariffs. Equally though, this may reflect a broader softening in economic momentum among developed economies given that exports to the EU edged down too."