China’s exports surged more than expected in July despite U.S. duties and its closely watched surplus with the United States remained near record highs, as the world’s two major economic powers ramp up a bitter dispute that some fear could derail global growth.
In the latest move by President Donald Trump to put pressure on Beijing to negotiate trade concessions, Washington is set to begin collecting 25% tariffs on another $16 billion in Chinese goods on August 23.
Tit-for-tat move
In a statement, China’s commerce ministry criticised the U.S. move as being ”unreasonable”, saying it had no choice but to adopt the same measure on an equal amount of American goods ranging from oil and steel products to autos and medical equipment.
Wednesday’s Chinese data provide the first readings of the overall trade picture for the world’s second-largest economy since U.S. duties on $34 billion of Chinese imports came into effect on July 6. China’s exports for July rose a bigger-than-expected 12.2% year-on-year, showing little tariff impact for now and beating June’s 11.2% rise and analysts’ expectations for 10% growth.
Of more direct consequence in the Sino-U.S. trade war, China’s surplus with the U.S. shrank only marginally to $28.09 billion last month from a record $28.97 billion in June. Washington has long criticised China’s trade surplus and has demanded Beijing cut it.
Those demands could get even more strident if the yuan’s sharp drop in recent months raises the ire of the U.S., which has in the past repeatedly criticised Beijing for manipulating its currency to gain an unfair trade advantage. Economists say China appears to be taking a more hands-off approach to the yuan, which marked its worst 4-month fall on record between April and July and has provided some reprieve for exporters.
