China on Wednesday posted a forecast-busting surge in exports for July but while its surplus with the US dipped slightly there was a warning that the full impact of US sanctions was yet to be felt.
The figures come as the world’s two largest economies exchange threats of stiff duties on billions of dollars worth of goods, fuelling fears of a full-blown trade conflict that could hit global growth.
Beijing reported a $28.1 billion surplus with the US in July, down from the record $28.9 billion seen in June. But it was 11 per cent higher than in the same month last year.
China’s global trade surplus also fell, from $41.5 billion in June to $28 billion in July. Exports surged a better-than-expected 12.2 per cent in July, while imports soared 27.3 per cent, also beating estimates.
But the latest readings are unlikely to ease tensions with Donald Trump’s administration. China’s gaping trade surplus with the United States has long been a bone of contention, with the president accusing the country of unfair practices, stealing American jobs and thieving its technological know-how.
While July’s numbers narrow the gap, the relatively small change will do “little to cool down the escalating trade tensions between the two countries”, said Betty Wang, senior China economist at ANZ Research.
The White House on July 6 imposed 25 per cent tariffs on $34 billion of Chinese products entering the US, triggering a tit-for-tat response from Beijing. Analysts were split on how much effect the tariffs had on July’s reading.