China’s surplus with the United States hit a record last month, data showed Friday, adding to brewing tensions between the economic superpowers as they stand on the brink of an all-out trade war that Beijing warned would have a “negative impact” globally.
The figures come after the two sides exchanged tit-for-tat tariffs on billions of dollars worth of goods and US President Donald Trump threatened to up the ante with measures on a further $200 billion of Chinese imports.
Beijing said China’s surplus with the US hit an all-time high $28.97 billion last month, while exports to the country hit a record $42.62 billion.
Over the first six months of the year the surplus climbed to $133.8 billion, up 13.8 percent from last year, as total two-way trade continued to expand despite the face-off.
The imbalance is at the heart of Trump’s anger at what he describes as Beijing’s unfair trade practices that are hurting American companies and destroying jobs.
But in a statement from its commerce ministry Thursday, China blamed those problems on the US, saying the imbalance was “overestimated” and caused by America’s own “domestic structural problems”.
China’s overall surplus continued to shrink, falling 24.5 percent on-year for the first six months, the data showed, with customs saying it has shrunk for the past eight quarters.
Last Friday, Trump rolled out 25 percent tariffs on $34 billion of Chinese goods, prompting Beijing to accuse Washington of launching the “largest trade war” in economic history and immediately match the US tariffs dollar for dollar.
“This trade dispute will definitely have an impact on China-US trade and will have a very negative impact on global trade,” said customs administration spokesman Huang Songping at a briefing Friday.
China’s commerce ministry has said the two sides are not discussing restarting trade negotiations, and renewed its pledge to “strike back” against Washington’s latest threat to slap $200 billion of Chinese imports with new 10 percent taxes.
The threat hammered global markets, especially as fears mount that Trump’s decision to pick fights with other key allies such as Canada and the European Union could fuel an all-out global trade war.
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 — and just as leaders try to battle a worryingly large debt mountain.
“Looking ahead, export growth will cool in the coming months as US tariffs start to bite alongside a broader softening in global demand,” said Julian Evans-Pritchard of Capital Economics.
Beijing will back away from its war on debt and roll out policy easing measures, predicted China economist at Nomura investment bank Ting Lu, as it faces potential trade war fallout and a domestic slowdown proving to be worse than expected.
“We expect (economic) growth to slow noticeably” in the second half of the year, he said in a research note.
China’s total exports rose 11.3 percent year-on-year in June, beating a Bloomberg News forecast of 9.5 percent, while imports increased 14.1 percent, below the forecast 21.3 percent.
China’s June export upswing may have been caused by exporters shipping their goods early to beat the scheduled tariffs, analysts say, with the trade fight expected to further impact such data in coming months.
Beijing has instructed companies to look for imports beyond the US, and this week an official at China’s largest grain trader said it hoped to diversify away from US soybeans to those grown in South America and Eastern Europe.
The US has “no respect for rules of international law and international order,” said assistant foreign minister Zhang Jun on Friday, adding that China would step up cooperation with other developing nations like the BRICS grouping.
“This is the way for us to respond to the challenges of unilateralism and trade protectionism,” said Zhang.