China's trade surplus widens in June as imports drop

Gladys Abbott
July 14, 2018

As the US-China trade war escalates, the latest trade numbers appear to back Washington's biggest gripe with Beijing.

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.

Total trade between the world's top two economies rose 13.1 per cent for the first half of the year, official data showed Friday, despite the brewing tensions.

The United States and China could reopen talks on trade but only if Beijing is willing to make significant changes, U.S. Treasury Secretary Steven Mnuchin said on Thursday. 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.

The dispute has jolted global financial markets, raising worries a full-scale trade war could derail the world economy.

Over the first six months of the year the surplus climbed to $133.8 billion as total two-way trade continued to expand despite the face-off.

The politically-sensitive data comes as sides have imposed 25% tariffs on 34-billion-dollars of the others' imports.

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China's June exports rose 11.3 percent from a year earlier, beating forecasts for a 10 percent increase according to the latest Reuters poll of 39 analysts, and down from a 12.6 percent gain in May.

However, a lower yuan would make it more expensive for China to import USA goods.

The news came as the two economic superpowers stand on the brink of an all-out trade war that would have a huge negative impact globally. 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 United States rose 11.8% in the same period.

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.

But comments from China's commerce ministry indicated that June's figures are a blip, a result of Chinese companies pushing to get products out the door before the tariffs went into effect, according to Reuters.

The spiralling battle with Beijing shows no signs of cooling down, and observers warn the impact will begin to hurt soon as China's economy struggles with slowing growth just as leaders try to battle a worryingly large debt mountain.

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