China’s trade surplus with US hits record

China’s trade surplus with the United States swelled to a record in June as its overall exports grew at a solid pace, a result that could further inflame a bitter trade dispute with Washington.

But signs exporters were rushing shipments before tariffs went into effect in the first week of July suggest the spike in the surplus was a one-off, Media reports on Friday.

Analysts are expecting a less favourable trade balance for China in coming months as duties on exports start to bite.

The data came after the administration of U.S. President Donald Trump raised the stakes in its trade row with China on Tuesday.

It said that it would slap 10 per cent tariffs on an extra 200 billion dollars worth of Chinese imports, including numerous consumer items.

China’s trade surplus with the United States, which is at the centre of the tariff tussle, widened to a record monthly high of 28.97 billion dollars.

This figure was up from 24.58 billion dollars in May, according to the media calculations based on official data going back to 2008.

Trump, who has demanded Beijing cut the trade surplus, could use the latest result to further ratchet up pressure on China, after both sides last week imposed tit-for-tat tariffs on 34 billion dollars of each other’s goods.

Washington has warned it may ultimately impose tariffs on more than 500 billion dollars worth of Chinese goods – nearly the total amount of U.S. imports from China last year.

The dispute has jolted global financial markets, raising worries a full-scale trade war could derail the world economy.

Chinese stocks fell into bear market territory and the yuan currency has skidded, though there have been signs in recent days its Central Bank is moving to slow the currency’s declines.

China’s June exports rose 11.3 per cent from a year earlier, China General Administration of Customs reported, beating forecasts for a 10 per cent increase according to the latest poll of 39 analysts.

It was down from a 12.6 per cent gain in May.

China’s commerce ministry confirmed last month that Chinese exporters were front-loading exports to the U.S. to get ahead of expected tariffs.

This situation could exacerbate any slowdown in shipments toward the year-end.

“Looking ahead, export growth will cool in the coming months as US tariffs start to bite alongside a broader softening in global demand,” Julian Evans-Pritchard, Senior China Economist wrote.

Evans-Pritchard works at Capital Economics in Singapore, though he noted a weaker yuan should help offset some of the decline.

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 per cent in the same period.

Separate data suggested some Chinese retailers moved up orders to the U.S. to insulate themselves from the intensifying trade war that threatens to send up costs on a growing number of consumer products.