[More than the tariffs, the worsening trade imbalance is also a reflection of the two countries’ economies, experts said. The U.S. economy is strengthening, with unemployment low and growth increasing, while the Chinese economy is slowing, sapping Chinese consumers’ ability to buy imported goods.]
By
Anna Fifield
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A man walks past a cargo
ship at a port in Qingdao in China's eastern Shandong
province Friday. China’s
trade surplus with the United States for the year
to date to $225.8
billion. (AFP/Getty Images)
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BEIJING
— China’s trade surplus with
the United States hit a record last month, defying — for now, at least —
President Trump’s predictions that tariffs would help redress the trade
imbalance.
Although economists expect the American
tariffs to eventually have an impact, the trade statistics reinforce the widely
held notion here that there will be no quick end to the trade war between
Washington and Beijing.
“It’s obvious that the immediate effects of
the trade war are the exact opposite of what the Trump administration had been
planning,” said Andrew Polk of Trivium China, a Beijing-based economics
research firm.
“We expect the dynamic to change once we get
a bit deeper into this, but for now China is trying to outrun the next round of
tariffs,” he said.
China enjoyed a record high $34.1 billion
trade surplus with the United States in September, taking the surplus for the
year to date to $225.8 billion, according to Chinese statistics released on
Friday. That’s significantly higher than the $196 billion recorded between
January and September last year.
The increase is the result of both increasing
exports from China to the United States — up 14.5 percent from the same month
last year — and a decline in the goods China is buying from the country.
More than the tariffs, the worsening trade
imbalance is also a reflection of the two countries’ economies, experts said.
The U.S. economy is strengthening, with unemployment low and growth increasing,
while the Chinese economy is slowing, sapping Chinese consumers’ ability to buy
imported goods.
The direct and indirect effects of the
ongoing trade frictions are “generally controllable,” Customs Department
spokesman Li Kuiwen said Friday. But global trade would continue to face
challenges as the U.S.-China trade frictions “have been escalating and other
unstable factors still exist caused by a number of economic uncertainties
worldwide,” he said.
The second round of tariffs the Trump
administration imposed on China came into effect on Sept. 24, so the increase
in exports last month might have been the result of Chinese companies rushing
to sell their products before the additional duties were added.
After imposing tariffs on $50 billion in
Chinese goods over the summer, the Trump administration last month added 10
percent tariffs to another $200 billion of Chinese products, including
household items such as furniture and toys as well as industrial equipment. The
tariffs are set to rise to 25 percent in January if the trade dispute is not
resolved by then, and Trump has vowed to impose tariffs on the remaining $267
billion of Chinese imports.
China retaliated last month by imposing
tariffs ranging from 5 to 10 percent on $60 billion of American goods, putting
them into effect on the same day as the American measures.
But it was still too early to see the effects
of the tariffs, said Julian Evans-Pritchard, China economist at Capital
Economics, a consultancy.
“The way the U.S. has structured the tariffs
encourages front-loading because firms that know they’re going to hit with
tariffs would rather pay 10 percent than 25 percent,” he said.
Plus, the 10 percent tariffs were almost
entirely offset by the fall in the Chinese currency, which has depreciated by more
than 8 percent since June. This makes Chinese products cheaper overseas.
Trump should take notice of the statistics,
said Huo Jianguo, a trade expert at the Center for China and Globalization in
Beijing.
“He won’t be happy with these figures but it proves
that tariffs don’t help curb exports,” Huo said. “Both sides need to find a way
to talk and make some other arrangements.”
Trump and Chinese President Xi Jinping have
agreed to meet next month at the G-20 summit in Buenos Aires, in hopes of
resolving their intensifying trade conflict. These would be the first direct
talks since August, but with both sides digging in their heels, there are few
hopes the leaders can secure a major breakthrough.
Trump said Thursday that his tariff strategy
was working. “It’s had a big impact,” Trump said in a “Fox & Friends”
interview. “Their economy has gone down very substantially and I have a lot
more to do if I want to do it.”
But China has been standing firm, repeatedly
saying that the only solution was through negotiation and compromise.
Trump’s strategy amounted to “bullying,” said
Yu Xiang, director of the division of American economic studies at the China
Institutes of Contemporary International Relations.
“Bullying might be effective for small
economic entities, but it will not be effective against a big economic power,”
Yu wrote in a column published Friday in the state-run China Daily. “The fight
won’t end in the blink of an eye, considering it is between the world’s two
biggest economies.”
Indeed, analysts expect the trade imbalance
to continue to widen over the next few months before the next round of American
tariffs kick in, in no small part because the divergence in consumer demand in
the two countries.
“China’s trade surplus will keep rising
because the domestic economy is cooling down,” said Andy Xie, a Shanghai-based
independent economist. “If China wants the surplus to come down, they have to
embark on structural reforms.”
Yang Liu in Beijing contributed to this
report.
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