China reports record trade surplus with US and exports growth in eve of tariffs
June’s trade surplus was US$28.9 billion on the back of a 12.6 per cent rise in China’s exports to the United States
China’s trade surplus with the United States reached a record high in June as the two countries sought and failed to prevent the start of their tit-for-tat tariff dispute.
The surplus amounted to US$28.9 billion last month – a record monthly figure since the data became available in 1999, according to data released by China’s General Administration of Customs on Friday.
China’s exports to the US rose 12.6 per cent in June compared with a year earlier, to US$42.6 billion, while Chinese imports of US products rose by 9.6 per cent to US$13.7 billion, the administration said.
In the January-June period, China’s exports to the US rose 13.6 per cent year on year to US$217.7 billion, while imports increased 11.8 per cent to US$84 billion, according to the Chinese customs data.
The US$133.7 billion trade surplus with the US for that period was just shy of the China’s total US$140 billion trade surplus in the first half.
The US was China’s biggest export market and the second-largest trading partner after the European Union in the first six months.
It was the first release of monthly data since both countries introduced 25 per cent tariffs on US$34 billion worth of products from each other last week.
In all China’s exports rose 12.8 per cent year on year to US$1.03 trillion in the first six months, including a rise of 11.7 per cent to the EU, 8 per cent to Japan and 18.3 per cent to Asean countries. In June alone, China’s exports grew 11.3 per cent, accelerating from the growth of 12.6 per cent in May.
Ding Shuang, chief Greater China economist at Standard Chartered Bank, said exports were better than expected overall thanks to the global recovery.
Ding partly attributed the rise in US-bound shipments to the yuan’s strengthening against the US dollar and a rush among exporters for sales ahead of the start of the tariffs.
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China’s overall imports, however, decelerated quickly in June with yearly growth rate slowing to 14.1 per cent from a reading of 26 per cent in May.
Oxford Economics chief Asia economist Louis Kuijs said Chinese policymakers might have to worry about slowing domestic demand.
“The import growth slowed sharply, consistent with other signs that China’s domestic economy has started to slow,” he wrote in a research note.
Larry Hu, head of Greater China economics at Macquarie Group, said China’s imports from the EU and the US “diverged” in June, with the former falling 6.5 per cent but the latter rising 9.6 per cent.
Hu said one reason was that Chinese importers rushed to buy US vehicles before the tariffs while importers of European and Japanese cars might have put off orders to enjoy lower duties.
A full-blown trade war has now become a big external risk for China’s growth.
Washington announced on Tuesday that it would target US$200 billion worth of Chinese products, expanded from the US$34 billion effective last Friday, with US Trade Representative Robert Lighthizer saying: “China has not changed its behaviour that puts the future of the US economy at risk.”
In Beijing, China’s customs spokesman Huang Songping said: “The trade disputes will certainly cast a shadow on bilateral trade and even global trade. We are closely watching its impact.”
The customs administration said last week that US-bound shipments of electronics and mechanical products grew 8 per cent year on year in the first half of 2018, accounting for 62.6 per cent of the total shipments.
The bilateral trade imbalance – which amounted to US$375 billion last year according to US statistics but about US$100 billion less by Beijing’s calculations – was a starting point of the two countries’ economic tension. But the row quickly spilled over into a variety of issues, including intellectual property rights protection and forced transfer of technology under the “Made in China 2025” strategy.
Beijing has not yet announced its latest “qualitative” retaliatory measures, since the US’ US$200 billion target is already higher than its total import of American merchandise, which was US$130 billion in 2017.
Commerce ministry spokesman Gao Feng said on Thursday that there had been no contact so far to arrange further trade talks.
In a subsequent statement, the ministry said US accusations of unfair practices over intellectual property protection and technology transfer represented a “distortion of facts” and were “groundless”.
“No matter how the external environment changes, the Chinese government will continue to let the market play the decisive role in resource allocation … push forward opening up, build an attractive investment environment and firmly support economic globalisation,” it said.