China's trade surplus with the USA grew in 2018 but tariffs bite

Postado Janeiro 14, 2019

China's trade surplus with the United States rose to $323.32 billion previous year, the highest on record going back to 2006, Reuters calculations based on customs data showed on Monday.

The dismal December trade readings suggest China's economy may have lost more momentum late in the year than earlier thought, despite a slew of growth boosting measures in recent months ranging from higher infrastructure spending to tax cuts.

Some analysts had already speculated that Beijing may have to speed up and intensify its policy easing andstimulus measures this year after factory activity shrank in December.

China's exports to the world fell 4.4% in December from a year earlier, while imports dropped 7.6%, reflecting sluggish demand at home and overseas.

The unexpected downturn for the biggest global exporter of manufactured products came as eurozone industrial output also tumbled in November, with the largest drop in factory activity since February 2016.

"Export growth dropped more than anticipated as global growth softened and the drag from USA tariffs intensified".

"A trade recession is likely, in our view", Raymond Yeung, chief economist at ANZ, said in a note, predicting a period of export contraction similar to 2015-16. For all of 2018, soybeans, the second largest imports from the United States, fell for the first time since 2011.

Despite the levies, exports to the United States grew 11.3 percent a year ago while imports rose 0.7 percent, expanding the surplus to a record $323.3 billion from $275.8 billion in 2017, customs data show.

In 2017, the trade difference between the two world's largest economies was $275.8 billion in China's favor.

The world's largest trading nation got off to a strong start in 2018, but pressure on the economy started to build later in the year as the United States and China began imposing tariffs on each other's goods and global demand started to cool.

The deceleration of exports adds to pressure on Beijing to resolve its costly tariff battle with Washington over Chinese technology ambitions.

However, Beijing's export data had been surprisingly resilient to tariffs for much of 2018, possibly because companies ramped up shipments before broader and stiffer US duties went into effect.

Imports increased 15.8 percent past year, resulting in a trade surplus of $351.76 billion, the country's lowest since 2013.

But December's gloomy data seemed to suggest the US front-loading effect has tapered off, and after several months of falling factory orders a further weakening in China's exports is widely expected in coming months.