Published: Sat, July 14, 2018
Markets | By Otis Pena

China's trade grows in June amid tensions with Washington

China's trade grows in June amid tensions with Washington

The US economy is far less reliant on trade than most other major countries, but there will be an impact from the higher costs of imports.

Washington has warned it may ultimately impose tariffs on more than $500bn worth of Chinese goods - almost the total amount of USA imports from China a year ago.

Analysts also pointed out that Chinese export growth slowed to 11.3% year on year in June, from 12.2% in May, illustrating that exporters, faced with the threat of further trade barriers, were becoming more circumspect in sending goods overseas.

In the first half of the year, Chinese exports to the USA increased 13.6 percent as compared to the same period in 2017, while imports from the US only rose 11.8 percent.

Last Friday, Trump rolled out 25% tariffs on $34 billion of Chinese goods.

However, analysts said the June figures were a sign that exporters rushed to beat the initial tranche of tariffs, which came into effect in the first week of July.

The difference between China's exports to the United States and its imports from the world's largest economy expanded to a monthly high of $29bn (£22bn), up from $24.6bn in May. Its trade surplus with the U.S. over the same period was $133.76bn, up from $117.51bn past year.

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Trump imposed $34 billion of tariffs on China, and another round of $16 billion is around the corner.

While China continues to benefit from strong global demand for its goods for now, the rising trade tensions with the U.S. has the potential to hurt both sides.

"This trade dispute will definitely have an impact on China-US trade and will have a very negative impact on global trade", a Chinese customs administration spokesman said today.

The commerce ministry also said this week it will use funds collected from tariffs charged on imports from the United States to help ease the impact of U.S. trade actions on Chinese companies and their employees.

Trump has railed against China's trade surplus with the USA, which ran at $375 billion in 2017, and has demanded Beijing cut it. Washington has warned it may ultimately impose tariffs on more than $500 billion worth of Chinese goods - roughly the total amount of United States imports from China previous year. "Trade wars are not easy to win", he said.

After a strong start to the year, growth in China's exports has moderated recently, and is expected to face more pressure from the initial round of USA tariffs.

But, he said, China has another option - Beijing could reduce the impact of United States tariffs on exporters by devaluing the yuan to make its goods cheaper for American consumers.

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