China's trade surplus hits $1.08 tn in 11 months, beating earlier record

By Keith Bradsher

 

China got the world’s attention last January when it announced that its trade surplus for goods and services had hit almost $1 trillion, an excess of exports to imports that no country had ever reached. Now China has surged through that milestone in just 11 months this year. China’s customs agency announced on Monday that the country’s accumulated trade surplus reached $1.08 trillion through November.

 

Tariffs imposed by US President Trump on China have caused Chinese exports to the US to drop by nearly a fifth. But China has throttled back its purchases of American soybeans and other products by almost the same rate, continuing to sell three times as much to the US as it buys.

 

China’s $111.68 billion trade surplus in November was its third-largest ever in a single month. The overall surplus through the first 11 months of the year is up 21.7 percent from the same period last year. 

 

China has ramped up considerably its sales to other countries. From cars to solar panels to consumer electronics, a tsunami of Chinese exports is flooding Southeast Asia, Africa, Europe and Latin America. Carmakers and other exporters in traditional manufacturing powerhouses like Germany, Japan and South Korea are losing customers to Chinese rivals. 

 

Chinese companies have shifted final assembly of their goods to Southeast Asia, Mexico and Africa, which then ship finished products to the US. This has allowed them to partly bypass Trump’s tariffs on goods coming straight from China.

 

China now sells more than twice as much to the European Union as it buys. China’s trade surplus with the region has widened considerably this year. One major reason is that China’s currency has been weak over the last several years against many other currencies, particularly the euro. Another is that prices have been falling in China, while they have been rising in the US and Europe. The weakness of the 

 

Chinese currency, the renminbi, has helped propel its exports. 

 

“With the renminbi undervalued by 30 percent against the euro, possibly more, it will be exceedingly difficult, if not impossible, to compete against Chinese manufacturers even if Europe does all the right things it needs to do in terms of deregulation, bringing down energy prices and establishing a true unified market,” said Jens Eskelund, the president of the European Union Chamber of Commerce in China.

 

China’s trade surplus in factory goods is even bigger as a share of its economy than the US ran in the years immediately after World War II, when most other manufacturing nations were in ruins; or during the early years of World War I, when the US was at peace and churning out civilian goods while Europe was embroiled in war.

 

Top leaders of the International Monetary Fund are making their annual visit to China this week to review its currency and financial policies and are expected to announce a preliminary summary of their findings on Wednesday. A growing number of economists and business leaders, including former senior officials at China’s own central bank, are calling on Beijing to let the renminbi increase in value against the dollar and other currencies.

 

For China, a stronger renminbi would make goods like gasoline, French wines or Japanese cosmetics cheaper to import. Savings on such purchases would leave China’s households with more money to spend on Chinese goods and services.

 

 

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