China trade surplus with United States hits record $29bn high

China trade surplus with US widens unexpectedly

The recently imposed tariffs on Chinese goods and services are meant to be the first step in this process.

That's not to say that China is eager for a trade war or can afford to be indifferent to its consequences, says David Dollar, who was the U.S. Treasury Department's financial emissary to China during the Obama administration. Those duties, in turn, were a response to new tariffs the United States had imposed on China.

Meanwhile, the labor union for Hyundai Motor Co. warned a downturn in USA auto imports due to Trump's threatened tariffs could force the company to curtail work at its Alabama factory opened in 2005. Recently, the U.S. announced tariff change recommendations.

Others are also being sucked up in the quagmire, resulting in a free for all scenario.

But, he said, China has another option - Beijing could reduce the impact of U.S. tariffs on exporters by devaluing the yuan to make its goods cheaper for American consumers. Trump's latest salvo threatens to push the trade fight into new territory, with China limited in using tariffs to push back. Instead we have in quick succession moved against China's practices and almost all of the world's steel and aluminum producers.

And as negotiations between the USA and its Nafta allies - Canada and Mexico - besides the European Union failed to find a solution to the American demands, these countries announced retaliatory action. "We're not going to have this any longer", he stressed.

This meant, in all practical sense, the era of free trade is nearly over.

More broadly on the outlook for the USA economy, the Treasury secretary said he doesn't consider the flatter yield curve - which lately is showing a narrowing in the spread between short- and long-term government debt yields - as indicative of an impending recession.




The trade war does not appear to be a hot item on China's tightly-controlled social media.

"Looking ahead, export growth will cool in the coming months as USA tariffs start to bite alongside a broader softening in global demand", Julian Evans-Pritchard, Senior China Economist at Capital Economics in Singapore wrote in a note, though he noted a weaker yuan should help offset some of the decline.

The US is now anxious about China's rising technological prowess. But countries like South Korea, Singapore and Taiwan could all be affected too because of disruption to supply chains, he added.

Exports and imports of products under the general trade category, which are differentiated from processing trade, gained 12.2 percent from a year ago to 8.33 trillion yuan, accounting for 59 percent of the total foreign trade, 2.3 percentage points higher than the same period in 2017.

"We expect the trade numbers for July to disappoint since that's when the first round of U.S. tariffs took effect", China analyst at Nordea Bank in Singapore Amy Zhuang told the BBC. -China trade war, The Associated Press erroneously reported that 20,000 jobs at an Alabama Hyundai plant could be at risk if the USA imposes higher auto tariffs. The International Monetary Fund is also of the opinion that any significant slowdown in trade would hit fuel usage.

The website was told to post only stories about the trade conflict by state news agency Xinhua, rather than publishing its own.

Opec is visibly anxious about the possible consequences. China's trade grew by double digits in June despite mounting tensions with Washington but the government warned it will face "rising instabilities and uncertainties". "This may then start to negatively impact investment, capital flows and consumer spending, with a subsequent negative effect on the global oil market". And to tear down such a delicate system, all one needs is a disruptive player. And crude markets are no exception to this rule of thumb.

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