Chinese exports accelerate even as Trump escalates trade war
Date: Wednesday, August 8, 2018
Source: Yahoo! News
China's exports surged more than expected in July despite U.S. duties and its closely watched surplus with the United States remained near record highs, as the world's two major economic powers ramp up a bitter dispute that some fear could derail global growth.
In the latest move by President Donald Trump to put pressure on Beijing to negotiate trade concessions, Washington is set to begin collecting 25 percent tariffs on another $16 billion in Chinese goods on Aug. 23.
In a statement on its official website late on Wednesday, China's commerce ministry criticized the U.S. move as being "unreasonable", saying it had no choice but to adopt the same measure on an equal amount of American goods ranging from fuel and steel products to autos and medical equipment.
Wednesday's Chinese data provide the first readings of the overall trade picture for the world's second-largest economy since U.S duties on $34 billion of Chinese imports came into effect on July 6.
All the same, China's exports for July rose a bigger than expected 12.2 percent year-on-year, showing little tariff impact for now and beating June's 11.2 percent rise and analysts expectations in a Reuters poll for 10 percent growth.
Of more direct consequence in the Sino-U.S. trade war, China's surplus with the United States shrank only marginally to $28.09 billion last month from a record $28.97 billion in June. Washington has long criticized China's trade surplus with the United States and has demanded Beijing cut it.
Those demands could get even more strident if the yuan's sharp drop in recent months raises the ire of the United States, which has in the past repeatedly criticized Beijing for manipulating its currency to gain an unfair trade advantage.
Economists say China appears to be taking a more hands-off approach to the yuan, which marked its worst 4-month fall on record between April and July and has provided some reprieve for exporters in the face of the rising trade tensions.
ANZ senior China economist Betty Wang said Beijing will likely resist using its closely managed currency as a tool in the trade war.
"Currency devaluation, which may have helped exports to some extent, has been largely market-driven in our view and is not a preferred policy tool by Chinese policy makers as part of the retaliation measures," Wang said.
China's trade with the U.S. also continued to rise in July despite the tariffs, with exports up 11.2 percent year-on-year, and imports increasing 11.1 percent.
Analysts still expect a less favorable overall trade balance for China in coming months given it's early days in the tariff brawl.
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