China’s trade surplus with US hits record high in 2017 amid rising tensions
Beijing will find it hard to maintain double-digit foreign trade growth this year, customs agency spokesman says
China’s trade surplus with the United States last year rose to a record high, a statistic that is unlikely to help ease tensions between the world’s two largest economies.
The figure rose 8.6 per cent year on year to US$275.8 billion, or about 65 per cent of China’s total global trade surplus, the General Administration of Customs said on Friday.
China’s overall imports for the month missed market expectations, rising just 4.5 per cent year on year, while exports did better than expected, adding 10.9 per cent from a year earlier.
Tackling the trade gap between the US and China – which Washington has said is US$100 billion wider than Beijing has reported – was one of US President Donald Trump’s election campaign promises, though his administration did not address the matter directly in his first year in the White House.
Beijing has successfully fended off Trump’s campaign rhetoric by making trade concessions, further opening up China’s financial markets and signing US$250 billion worth of deals with the US during the president’s Beijing visit in November. Trump, who labelled China a currency manipulator during his election campaign, also threatened to impose a 45 per cent punitive tariff on inbound goods from China.
Huang Songping, a spokesman for the customs agency, said China would find it hard to maintain double-digit foreign trade growth this year.
Washington has already shown signs it is preparing to take a tougher line on trade. Last summer, it launched an investigation into China’s intellectual property practices under Section 301 of the US Trade Act.
It also denied China market economy status and initiated an aggressive new trade action against what it said were unfairly subsidised and dumped imports of Chinese aluminium alloy sheet.
On Thursday, China warned Washington it would “resolutely safeguard” its interests ahead of a possible decision on whether Beijing improperly pressured foreign companies to hand over proprietary technology.
The 7.9 per cent growth in Chinese exports in 2017 contributed to a “better than expected” rise in China’s gross domestic product, estimated at 6.9 per cent, Premier Li Keqiang told a conference in Cambodia on Wednesday.
China’s exports rose 7.9 per cent to US$2.26 trillion last year, leading the world once again, while imports climbed 15.9 per cent to US$1.84 trillion, according to customs data.
The headwinds from across the Pacific pose a challenge for leaders of the Communist Party who prioritised the tackling of domestic problems – risk prevention, poverty reduction and pollution control – in 2018.
After calling China a competitor in his national security strategy last month, Trump is estimated to roll out more specific measures in his upcoming state-of-the-union speech.
Gao Feng, a spokesman for China’s Ministry of Commerce, said on Thursday that both countries should manage their differences through dialogue to prevent them from escalating into conflict.
“The bilateral imbalance is not formed in one day. It’s a result of a different economic structure, industry competitiveness, international division of labour, statistics system and the US ban on hi-tech export,” Gao said.
“China never deliberately pursues a trade surplus. All, [whether] export or import, goods or service, are up to the choice of market, corporations and clients,” he said.
Michael Pettis, a Peking University professor of finance, warned that the trade environment was going to get much worse.
“What history tells us is that a trade war is terrible for surplus countries. China, Japan and Germany are the countries getting hurt the most by these trade problems,” he said.
Beijing should rely more on domestic consumption for growth in the long run, Pettis said.