Economy

China-US surplus hits record, adding fuel to trade war

China-US surplus hits record, adding fuel to trade war

China's trade surplus with the United States ballooned to a record $34.1 billion in September, despite a raft of USA tariffs, official data showed Friday, adding fuel to the fire of a worsening trade war.

In fact, the September surplus with the US was larger than China's overall trade surplus of $31.69 billion for the month.

The United States and China imposed new tit-for-tat tariffs against each other's goods in late September, the latest escalation in a heated trade war between the world's two largest economies.

"With global growth likely to cool further in the coming quarters and United States tariffs set to become more punishing, the recent resilience of exports is unlikely to be sustained".

Washington announced the nuclear technology controls a day after the U.S. Justice Department said it had arrested and indicted a spy for China's Ministry of State Security on charges of economic espionage.

China's overall trade - what it buys and sells with all countries including the United States - logged a $31.7 billion surplus, as exports rose faster than imports. It was a 22 percent jump from the same month previous year.

Despite concerns from some officials about the yuan's depreciation, U.S. Treasury staff have not recommended labeling China as a currency manipulator in a coming report on foreign exchange rate practices, according to media reports on Thursday.

Analysts said last month's strong export growth - which might indicate USA tariffs are not biting much yet - is unlikely to be sustained.

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The review, which examined the economic and national security ramifications, was prompted by China's efforts to gain United States intellectual property, sometimes illicitly, in ways that undermine American businesses and the military, officials told reporters in a conference call.

Beijing's export data has been surprisingly resilient to tariffs, possibly because companies ramped up shipments before broader and stiffer US duties went into effect, raising concerns about a sharper drop in export strength once all tariffs kick in. The two countries expect bilateral trade to hit $100 billion this year and plan to steadily boost it to $200 billion by 2024.

Export numbers have been buoyed by producers rushing to fill orders before American tariffs rose, but they also benefit from "robust USA demand" and a weaker Chinese currency, which makes their goods cheaper overseas, said Louis Kuijs of Oxford Economics in a report.

Chinese exports to the American market rose by 13 percent over a year to $46.7bn, down from August's 13.4 percent growth, customs data showed on Friday.

For trade with all countries, China logged a surplus of $31.69 billion for September, compared with forecasts in a Reuters poll for $19.4 billion and August's surplus of $27.89 billion.

The US tariffs cover a broad range of Chinese consumer goods, while China's were aimed mainly at American liquefied gas, machinery and electric equipment. An official survey also confirmed a further manufacturing weakening.

The International Monetary Fund this week cited the trade war as it lowered its 2019 growth forecast for China, which is set to see its slowest expansion since 1990.