BEIJING: China’s exports surged more than expected in July despite US duties and its closely watched surplus with the United States remained near record highs, as the world’s two major economic powers ramped 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 per cent tariffs on another $16 billion in Chinese goods on August 23.
Wednesday’s Chinese data provide the first readings of the overall trade picture for the world’s second-largest economy since US duties on $34 billion of Chinese imports came into effect on July 6.
All the same, China’s exports for July rose a bigger than expected 12.2 per cent year-on-year, showing little tariff impact for now and beating June’s 11.2 per cent rise and analysts expectations in a Reuters poll for 10 per cent growth.
Of more direct consequence in the Sino-US trade war, China’s surplus with the United States 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 with the United States 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 United States, 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 in the face of the rising trade tensions.
ANZ senior China economist Betty Wang said Beijing will likely resist using its closely managed currency as a tool in the trade war. “Currency devaluation, which may have helped exports to some extent, has been largely market-driven in our view and is not a preferred policy tool by Chinese policy makers as part of the retaliation measures,” Wang said. — Reuters
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