China trade surplus with United States hits historic high & timing couldn’t be worse

14 July, 2018, 12:05 | Author: Brooke Harris
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China's monthly trade surplus with the United States hits a record high in June, amid a bitter trade dispute between the world's two largest economies.

The trade surplus was 261.88 billion yuan last month, official data showed.

China's trade surplus widened sharply amid escalating trade tensions with the USA, which is preparing to impose fresh tariffs on a further $200 billion in Chinese goods.

"We expect the trade numbers for July to disappoint since that's when the first round of United States tariffs took effect", said Amy Zhuang, China analyst at Nordea Bank in Singapore.

The figures come after the two sides exchanged tit for tat tariffs on billions of dollars worth of goods and Donald Trump threatened to up the ante with measures on a colossal $200 billion of Chinese imports. That leaves about $80 billion for penalty tariffs after Beijing's previous increases either imposed or threatened on a total of $50 billion of US goods are counted.

"Looking ahead, export growth will cool in the coming months as U.S. tariffs start to bite alongside a broader softening in global demand", Capital Economics analyst Julian Evans-Pritchard said in a statement.

China's Commerce Ministry said that Beijing had no choice but to fight back after the United States "launched the largest trade war in economic history", accusing Washington of violating the rules of the World Trade Organization (WTO).

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China's commerce ministry confirmed last month that Chinese exporters were front-loading shipments to the United States to get ahead of expected tariffs - a situation that could exacerbate any slowdown in shipments toward the year-end.

In yuan terms, China's exports grew 3.1% in June and imports rose 6.0%. Both official and private business surveys reported softer export orders last month as the trade row deepens.

Imports grew 14.1 percent in June, customs said, missing analysts' forecast of a 20.8 percent growth, and compared with a 26 percent rise in May.

"This trade dispute will definitely have an impact on China-US trade and will have a very negative impact on global trade", a Chinese customs administration spokesman said today.

For January-June, it rose to $133.76 billion, compared with about $117.51 billion in the same period a year ago.

Analysts also pointed out that Chinese export growth slowed to 11.3% year on year in June, from 12.2% in May, illustrating that exporters, faced with the threat of further trade barriers, were becoming more circumspect in sending goods overseas. China is running out of American goods for retaliatory tariffs due to their lopsided trade balance.

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