China Reports Biggest-Ever Annual Trade Surplus With U.S.
Date: Monday, January 15, 2018
Source: Fox Business
China's chronically high trade surplus with the U.S. hit a record level in 2017, adding fuel to Trump administration criticisms about Chinese trade practices just as it weighs a range of penalties and other actions to curb the imbalance.
Stronger growth in the U.S. pushed up demand for Chinese exports, expanding China's trade surplus in goods by 10% to $275.8 billion last year, even as its overall trade surplus shrank 17%, according to Chinese customs data released Friday.
The trade deficit with China is the U.S.'s largest with any trading partner and 2017's is the biggest with China in the nearly five decades for which records exist. Friday's announcement of the 2017 imbalance comes amid tensions over trade between Washington and Beijing that are already so strained that officials on both sides say a cycle of tit-for-tat measures, if not an outright trade war, is a risk.
President Donald Trump's administration faces a series of decisions in coming weeks on whether to enact penalties on imports of Chinese solar panels and steel and aluminum products. Also, an investigation is proceeding on whether China is forcing American companies to turn over proprietary technologies and information in exchange for access to the Chinese market.
Mr. Trump savaged China as a predatory trader during his campaign for the presidency.
In an interview with The Wall Street Journal on Thursday, before the latest trade figures were published, Mr. Trump suggested he would have resorted to sterner measures to correct the trade imbalance with China if it weren't for Beijing's help in pressuring North Korea to stop its nuclear weapons development. "We've been much tougher on China, but not nearly as tough as I would be, but they are helping us a lot with North Korea," Mr. Trump said.
Chinese officials have threatened retaliation for any U.S. penalties in closed-door meetings with American officials and companies. Publicly, the Chinese government has sought to play down tensions.
An official with China's customs administration, in announcing Friday's trade figures, sidestepped a question on the data, noting that "Sino-US trade grew rapidly in 2017."
A day before, the Chinese Commerce Ministry's spokesman sounded a defensive note to reporters about China's trade and said that the "inevitable" frictions should be resolved through negotiation. "What I want to stress is that China had never sought a trade surplus on purpose. No matter exports or imports, trade in goods or services, there are all decided by markets--by companies and consumers of two countries, " said the spokesman, Gao Feng.
Some economists and market analysts expect that, in the very least, 2018 is likely to bring plenty of trade fiction, and U.S. penalties on some Chinese imports. "We cannot exclude the possibility of the U.S. taking unilateral actions on Chinese exports in specific sectors, even though a broad-based bilateral trade war is still highly unlikely in 2018," Betty Wang, an economist at ANZ, said in a research note.
China's $275.8 billion surplus last year surpassed the previous record of $261 billion in 2015, according to Chinese data. U.S. figures put the 2015 deficit with China at $367 billion.
China's trade figures don't match U.S. figures due to different calculation methods. Indirect shipments via Hong Kong and other intermediaries is another factor that has been cited for the discrepancy in the sets of figures. Neither the Chinese nor U.S. figures include trade in services, which when factored in, China's Commerce Ministry says, gives the U.S. a more balanced trade relationship with China.
The Trump administration has pursued actions against what it says are unfairly priced Chinese exports both unilaterally under U.S. laws and at the World Trade Organization. Mr. Trump, though, has repeatedly pulled back from the severe moves he touted on the campaign trail because, he says, Beijing is working with Washington to restrain North Korea.
The Chinese data also showed that China's imports from North Korea fell 33% in 2017, a possible indication of Beijing's cooperation with the U.S. over Pyongyang, though China's exports to North Korea increased 8.3%.
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