China's record trade surplus with U.S. adds fuel to
trade war fire
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[September 08, 2018]
By Elias Glenn and Lusha Zhang
BEIJING (Reuters) - China's trade surplus
with the United States widened to a record in August even as the
country's export growth slowed slightly, an outcome that could push
President Donald Trump to turn up the heat on Beijing 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 percent, 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
percent, 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 percent, slowing only slightly from
12.2 percent in July.
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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
United States 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 economist at Zhonghai Shengrong Capital
Management.
Zhang said the impact from U.S. tariffs on China's exports would likely
be limited over the next few months.
China's imports from the United States 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.
Washington has long criticized China's huge trade surplus with the
United States and has demanded Beijing 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, technology transfers 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.
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![](../images/090817pics/busine69.jpg)
Containers are seen at the Yangshan Deep Water Port, part of the
Shanghai Free Trade Zone, in Shanghai, China, February 13, 2017.
REUTERS/Aly Song
![](http://archives.lincolndailynews.com/2018/Sep/08/images/ads/current/brickey_lda_061314.png)
That resulted in China 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 China would be running a deficit if trade with the world's
largest economy was excluded.
EXPORTS HOLDING UP
While no one predicted a sudden, sharp blow from U.S. tariffs, China's official
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 steel mills 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.
Official and private manufacturing surveys for China 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 analyst with Bank of Communications.
Policymakers have shifted their focus in recent months to improving credit
conditions and shoring up business confidence.
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Beijing is ramping up spending on infrastructure projects to spur domestic
demand and the central bank 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.
(Additional reporting by Xu Jing; Editing by Jacqueline Wong)
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