BEIJING (Reuters) – China’s exports unexpectedly accelerated in June and its trade surplus with the United States hit a record high in a positive sign for the economy, though the overall result looks set to keep a bitter trade dispute with Washington on the boil for a while longer.
Growth in imports for June showed a moderate slowdown from May, official data showed on Friday.
The data came after the administration of U.S. President Donald Trump raised the stakes in its trade dispute with China on Tuesday, saying it would slap 10 percent tariffs on an extra $200 billion worth of Chinese imports, including numerous consumer items.
Firing the first shots in a trade war that has rattled financial markets and raised risks to the global economy, Washington last week imposed 25 percent tariffs on $34 billion of Chinese imports, drawing rapid retaliatory duties by Beijing on the same amount of U.S. exports to China.
China’s June exports rose 11.3 percent from a year earlier, beating forecasts for a 10 percent increase according to the latest Reuters poll of 39 analysts, and down from a 12.6 percent gain in May.
After a strong start to the year, growth in China’s exports has moderated recently, and is expected to face more pressure from the initial round of U.S. tariffs. Both official and private business surveys reported softer export orders last month as the trade row deepens.
China’s foreign trade faces risks of slowing in the second half of the year, General Administration of Customs spokesman Huang Songping told a news conference, though he said Beijing was capable of handling challenges.
Analysts expect shipments growth to slow in the second half of the year, putting more strain on an economy already feeling the pinch from a multi-year debt battle that has driven up corporate borrowing costs.
Investors fear a prolonged trade battle with the United States could harm business confidence and investment, disrupting global supply chains and harming growth in China and the rest of the world.
China’s commerce ministry confirmed last month that Chinese exporters were front-loading shipments to the U.S. to get ahead of expected tariffs – a situation that could exacerbate any slowdown in shipments toward the year-end.
Imports grew 14.1 percent in June, customs said, missing analysts’ forecast of a 20.8 percent growth, and compared with a 26 percent rise in May.
The commerce ministry also said this week it will use funds collected from tariffs charged on imports from the U.S. to help ease the impact of U.S. trade actions on Chinese companies and their employees.
The ministry encouraged companies to increase import of soybean, soymeal, vehicles, aquatic products from other markets.
In a sign Beijing is seeking alternative supplies of the commodities as it hit U.S. imports with extra tariffs, China had dropped import tariffs on a range of animal feed ingredients from several Asian countries.
TRADE SURPLUS WITH U.S. HITS RECORD
China’s exports to the United States rose 13.6 percent in the first half of 2018 from a year earlier, while its imports from the U.S. rose 11.8 percent in the same period.
The trade balance between the two countries, which is at the center of the trade dispute, continued to move in favor of China.
In June the surplus with the U.S. was at $28.97 billion, up from $24.58 billion in May, according to Reuters calculations based on customs data released on Friday.
The surplus was the highest ever with the U.S. for any single month, according to Reuters calculations based on official data going back to 2008.
For January-June, it rose to $133.76 billion, compared with about $117.51 billion in the same period last year.
Trump has railed against China’s trade surplus with the U.S., which ran at $375 billion in 2017, and has demanded Beijing cut it. Washington has warned it may ultimately impose tariffs on more than $500 billion worth of Chinese goods – roughly the total amount of U.S. imports from China last year.
China logged a trade surplus of $41.61 billion for the month, compared with forecasts for a $27.61 billion surplus in June and a surplus of $24.92 billion in May. The surplus was China’s highest since December.
Reporting by Yawen Chen and Elias Glenn; additional reporting by Lusha Zhang; Editing by Shri Navaratnam
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