China trade surplus with U.S. widens unexpectedly

Howard TerryJul 14, 2018

But, he said, China has another option - Beijing could reduce the impact of USA tariffs on exporters by devaluing the yuan to make its goods cheaper for American consumers.

Analysts expect to see the impact of the tariffs in the coming months, warning of a less favorable trade balance for China.

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.

The figures come a week after the trade war between the two began, with the U.S. imposing tariffs on $34bn of Chinese goods, and China retaliating.

In turn, the Trump administration accused China of not negotiating "seriously" on trade and released on Tuesday a list of $200 billion worth of Chinese exports that could be subject to new 10-percent tariffs. So far China has responded in kind, adding tariffs to $34bn of goods from the USA and threatening "firm and forceful measures" to match the threat of tariffs on $200bn worth of United States exports. China's exports to the U.S. jumped by 13.6% in the first half of 2018 from a year earlier, while its imports from the USA rose 11.8% in the same period.

Chinese data released Friday showed that the USA trade deficit with China hit $28.97 billion in June, an increase of $4.39 billion from May, according to Reuters.

Earlier this week Donald Trump proposed a 10% tariff on $200bn of Chinese goods entering the U.S., saying that tariffs already in place on steel and aluminium imports and $34bn of goods had failed to force significant reforms by Beijing. Both official and private business surveys reported softer export orders last month.

South Korea, Asia's fourth-largest economy, warned on Thursday that components and materials used in home appliances, computers and communications devices could be caught in the crossfire of the trade war.

Exports rose 11.3 per cent over a year earlier to $216.7 billion, down from May's 12.6 per cent growth, customs data showed Friday.

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.

"There will be challenges facing foreign trade with rising instabilities and uncertainties in the global environment, " said a Chinese customs agency report.

The data could renew longstanding criticism from the United States and Europe that the world's top metal producer is selling its surplus product overseas, hurting foreign rivals.

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