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China's trade surplus with U.S. hits record as exporters rush to beat tariffs

 
But the signs that exporters were in a hurry with supplies before tariffs took effect in the first week of July indicate that the surplus surge was one-off, and analysts had expected a less favorable trade balance for China in the coming months, as export duties begin bite.


The data came after the administration of President of the United States Donald Trump raised rates in its trading line with China on Tuesday, saying that it would reduce 10-percent tariffs on imports of Chinese imports of $ 200 billion, including numerous consumer goods.


Trade surplus of China's trade with the US, which is at the center of the tariff struggle, increased to a record monthly maximum of 28.97 billion dollars. The US, compared with 24.58 billion dollars. In May, according to calculations by Reuters on the basis of official data relating to 2008.


A record surplus "will not help the already sour relations and the increase in tension," Jonas Short, head of the office in Beijing at Everbright Sun Hung Kai, wrote in a note.


Trump, who demanded from Beijing to reduce the trade surplus, could use the latest result to further strengthen pressure on China after both sides last week imposed tit-for-tat tariffs on each other's $ 34 billion. Washington warned that in the end, he could introduce tariffs on Chinese goods worth more than $ 500 billion - almost the total amount of US imports from China last year.


The dispute shocked the global financial markets, sparking fears that a full-scale trade war could disrupt the global economy. Shares of China fell to the bear market, and the renminbi rate jumped, although in recent days there have been signs that the central bank is moving to slow the depreciation of the currency.


Exports in June in China increased by 11.3 percent compared to the same period last year, reported the general administration of China, ahead of forecasts by 10 percent according to the latest survey of Reuters of 39 analysts and down from May to 12.6 percent.


The Chinese Ministry of Commerce confirmed last month that Chinese exporters export exports to the US in order to get ahead of the expected tariffs - a situation that could aggravate any slowdown in deliveries by the end of the year.


"Looking to the future, export growth in the coming months will be cool, as US tariffs will start to bite, together with wider softening of global demand," wrote Junian Evans-Pritchard, senior economist at China Capital in Singapore, although he noted the weakening of the Yuan should help compensate some decrease.
EXPORT, ECONOMIC RISKS


China's exports to the US rose by 13.6 percent in the first half of 2018 compared to the previous year, while its imports from the United States grew by 11.8 percent over the same period.


Separate data indicate that some Chinese retailers have transferred orders to the US to isolate themselves from the intensification of the trade war, which threatens to direct spending on an increasing number of consumer goods.


In January-June, China's trade surplus with the US rose to $ 133.76 billion. The US, compared with about 117.51 ​​billion dollars. In the same period last year.


After a strong beginning of the year, China's export growth has softened recently, and it is expected that it will face greater pressure from the initial round of US tariffs. Both official and private business polls reported softer export orders last month.


Foreign trade of China faces the risk of slowing down in the second half of the year, a press conference given to the Chief Customs Administration Juan Songping - an opinion supported by analysts and probably will increase the burden on the economy, which already felt a pinch from the long-term debt battle that led to growth value of corporate loans.


Investors fear that a long-running trade battle with the United States could damage business confidence and investment, disrupt global supply chains and damage growth in China and the rest of the world.


South Korea, the fourth largest economy in Asia, on Thursday warned that components and materials used in household appliances, computers and communication devices, can be caught in the crossfire of a trade war.
 
LOOKING FOR A TRADING LOOK?


Import grew by 14.1 percent in June, customs officials say, skipping forecasts of analysts by 20.8 percent, and compared with 26 percent growth in May.


The Commerce Department also reported that this week it will use the funds levied on tariffs levied on imports from the US to ease the impact of US trade operations on Chinese companies and their employees.


As a sign that Beijing is looking for alternative supplies of goods, as it came into US imports with additional tariffs, China lowered import tariffs for a number of animal feed ingredients from several Asian countries.


Separate data on customs on Friday showed that imports of goods from soybean to crude oil weakened compared to last year, but China's steel mills and aluminum plants sold much more abroad, helped by higher international prices amid growing concerns about slowing growth demand.


The data may renew old criticism from the United States and Europe that the world's leading metal producer sells its surplus product abroad, infringing on foreign competitors.


"We expect a slowdown in export growth to put pressure on the current account and the yuan (yuan), and we believe that China will most likely want to make concessions in future rounds of trade negotiations with the US," said Nomura analysts in a note to customers,





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