China's trade surplus with US hits record $31 billion

Published September 9, 2018
Workers pack tinned peaches for export at a fruits processor in Huaibei city in central China's Anhui province. — AP
Workers pack tinned peaches for export at a fruits processor in Huaibei city in central China's Anhui province. — AP

China's trade surplus with the United States (US) widened to a record $31 billion in August as exports surged despite American tariff hikes, potentially adding fuel to President Donald Trump's battle with Beijing over industrial policy.

Exports to the US rose 13.4 per cent to $44.4 billion, ticking up from July's 13.3 per cent growth, according to customs data. Imports of US goods rose 11.1 per cent to $13.3 billion, decelerating from the previous month's 11.8 per cent.

That could help reignite US demands that Beijing narrows its trade gap, which has temporarily been overshadowed by their clash over complaints China steals or pressures foreign companies to hand over technology.

Explore: What’s on everyone’s mind in China-US trade war

The two sides have imposed 25 per cent tariffs on $50 billion of each other's goods. The Trump administration is deciding whether to extend penalties to another $200 billion list of Chinese imports. Beijing says it will retaliate.

With no settlement in sight, the spiralling conflict between the two biggest economies has fed fears it will chill global trade and economic growth.

The Commerce Ministry expressed confidence on Thursday that China can maintain “steady and healthy” economic growth despite the trade pressure.

On Friday, Trump he was ready to step up the pressure by raising tariffs on yet another $267 billion list of Chinese imports. That would mean penalties cover almost all goods from China sold to the US.

Chinese leaders have rejected pressure to scale back plans for state-led development of global champions in robotics and other technologies.

Their trading partners complain those violate Beijing's free-trade commitments and US officials worry they might erode American industrial leadership. But communist leaders see their industry plans as the path to prosperity and global influence.

As tensions mounted, Beijing agreed in May to narrow its trade gap with the US by purchasing more American soybeans, natural gas and other exports. Chinese leaders scrapped that deal after Trump's first tariff hikes hit.

Chinese exporters of lower-value goods such as handbags and surgical gloves say US orders have fallen off. But sellers of factory machinery and other more advanced exports express confidence they can keep their US market share.

The Chinese customs agency took the rare step of announcing August trade data on Saturday instead of a working day. That would give financial markets a chance to digest the politically sensitive data before trading opens on Monday.

The Chinese trade gap with the US was up from July's $28 billion and June's $29 billion. Beijing reported a record $275.8 billion trade surplus with the US last year.

Forecasters had said China's sales to the US, its largest national export market might weaken after manufacturers rushed to fill orders ahead of Trump's first tariff hike July 6. But trade data have yet to show a significant impact.

China's global exports rose 12.2 per cent to $217.4 billion, down from July's 12.6 per cent. Imports rose 20.9 per cent to $189.5 billion, down from 21 per cent.

The country's global trade gap was $27.9 billion. That meant that without sales to the US market, China would have run a trade deficit.

China regularly runs deficits with many of its trading partners that supply oil, industrial components and other imports and pays for those by running a surplus with the US and Europe.

Exports to the 28-nation European Union, China's biggest trading partner, rose 11 per cent to $37 billion. Imports rose 15 per cent to $24.9 billion, leaving a surplus of $6.1 billion.

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