In his trade war with China, Donald Trump has secret allies

Lloyd Doyle
January 14, 2019

China's politically sensitive trade surplus with the United States surged to a record $323.3 billion in 2018 as a tariff battle with Washington intensified.

Washington was threatening even higher tariffs before Trump and Chinese President Xi Jinping agreed on a 90-day truce in December.

The bigger trade gap may add pressure on the Trump administration to raise the tariffs on China further.

However, customs' data for December also showed that exports to the USA dropped 3.5 percent compared with December of the previous year, possibly due to USA tariffs on an array of Chinese goods. Import growth also fell sharply in the face of cooling domestic demand.

"Meanwhile, with policy easing unlikely to put a floor beneath domestic economic activity until the second half of this year, import growth is likely to remain subdued".

The higher tariffs China levied on US supplies also hit the country's overall import growth.

"Today's data reflect an end to export front-loading and the start of payback effects, while the global slowdown could also weigh on China's exports", Nomura economists wrote in a note, referring to a surge in shipments to the United States over much of previous year as companies rushed to beat further tariffs.

China's government reports 2018 exports rose 7.1 percent as a trade battle with Washington intensified, while imports were up 12.9 percent.

It added that there are some "hidden concerns" and "uncertain external factors" for development.

But a slew of bad data has added to concerns about China's economy, which is expected to have grown around 6.5% in 2018, down from 6.9% in 2017 and the weakest rate in nearly three decades.

China's annual passenger vehicle sales fell last year for the first time in more than 20 years, as the trade war with the USA rocked consumer confidence and Beijing reined in auto financing channels.

China's exports unexpectedly fell the most in two years in December and imports also contracted, pointing to further weakness in the world's second-largest economy in 2019 and deteriorating global demand.

Other reports by Iphone Fresh

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