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China's record trade surplus with US in August adds fuel to trade war fire

Moreover, China's imports from the United States grew only 2.7% in August, a slowdown from 11.1% in July

Reuters  |  Beijing 

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China's trade surplus with the widened to a record in August even as the country's export growth slowed slightly, an outcome that could push to turn up the heat on in their cantankerous trade dispute.

The politically sensitive surplus hit $31.05 billion in August, up from $28.09 billion in July, customs data showed on Saturday, surpassing the previous record set in June.

Over the first eight months of the year, China's surplus with its largest export market has risen nearly 15 per cent, adding to tensions in the trade relationship between the world's two largest economies.

China's annual export growth in August moderated slightly to 9.8 per cent, the data showed, the weakest rate since March but only slightly below recent trends.

The number missed analysts' forecasts that shipments from the world's largest exporter would rise 10.1 per cent, slowing only slightly from 12.2 percent in July.

Even with U.S. tariffs targeting $50 billion of Chinese exports in effect for their first full month in August, China's exports to the still accelerated, growing 13.2 percent from a year earlier from 11.2 percent in July.

"There is still an impact from front-loading of exports, but the main reason (for still-solid export growth) is strong growth in the U.S. economy," said Zhang Yi, an at

Zhang said the impact from US tariffs on China's exports would likely be limited over the next few months.

China's imports from the grew only 2.7 percent in August, a slowdown from 11.1 percent in July.

The world's largest trading nation got off to a strong start this year, but its economic outlook is being clouded by the rapidly escalating U.S. trade dispute and cooling domestic demand.

Trump upped the ante on Friday, warning he was ready to slap tariffs on nearly all Chinese imports to the United States, threatening duties on another $267 billion of goods on top of $200 billion in imports primed for levies in coming days.

has long criticised China's huge trade surplus with the United States and has demanded reduce it. Still, disagreements between the two major economic powers run deeper than just the trade balance and tensions remain over limits on U.S. firms' access to Chinese markets, intellectual property protection, and investment.

Imports, a key gauge of the strength of China's domestic demand, grew 20 percent, beating forecasts. Analysts had expected growth of 18.7 percent, slowing from July's surprisingly high 27.3 percent.

That resulted in posting a smaller overall trade surplus of $27.91 billion for the month. Analysts had expected the surplus would rise to $31.79 billion from $28.05 billion in July.

The surplus with the United States was larger than China's net surplus for the month, indicating would be running a deficit if trade with the world's largest was excluded.

EXPORTS HOLDING UP

While no one predicted a sudden, sharp blow from US tariffs, China's export data has been surprisingly resilient so far, with growth exceeding analysts' expectations for five months in a row.

Chinese officials acknowledged Chinese exporters have been rushing out shipments to beat new U.S. tariffs, buoying the headline growth readings, while some companies such as are diversifying and selling more products to other countries.

Economists have noted that disruptions in supply chains are likely to be more company specific, and will take time to be reflected in broad economic data and corporate earnings reports.

However, anecdotal evidence of mounting trade damage on both sides of the Pacific is on the rise.

and private for show global demand for Chinese goods is clearly on the wane, with export orders shrinking for months in a row.

"Risks have increased due to the negative impacts of China-U.S. trade friction. The impact on exports may gradually start to show up, with future export growth possible declining," said Liu Xuezhi, an with of Communications.

Policymakers have shifted their focus in recent months to improving credit conditions and shoring up business confidence.

is ramping up spending on infrastructure projects to spur domestic demand and the central is tamping down borrowing costs and leaning on commercial banks to continue lending to struggling firms hit by trade troubles.

But such steps will take time to arrest the economy's slide, and analysts expect the government to unveil more stimulus measures if business conditions continue to deteriorate.

 

 

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

First Published: Sat, September 08 2018. 13:19 IST
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