China's vast export engine unexpectedly accelerated in September, producing a record trade surplus with the United States that could worsen already strained relations between Beijing and Washington.
China's trade surplus with the United States ballooned to a record $34.1 billion in September — surpassing the previous all-time high of $31.05 billion set in August — despite a raft of US tariffs imposed by the Trump administration under efforts to pluck the trade gap.
According to data released by the Chinese Customs Office on Friday, this was the result of a surprise jump in September exports to the US, which grew to $46.7 billion (€40.3 billion). At the same time, Chinese imports from the US slumped to $12.6 billion from the previous month.
Analysts have said the strong export growth in the world's second largest economy is indicating that high US tariffs on Chinese goods are not biting yet.
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Julian Evans-Pritchard, China economist at Capital Economics, said in a note to investors that exports were probably also supported by a recent weakening in the Chinese currency against the US dollar, and added: "With global growth likely to cool further in the coming quarters and US tariffs set to become more punishing, the recent resilience of exports is unlikely to be sustained."
Nevertheless, the robust numbers could prompt a strong reaction from US President Donald Trump, who just on Thursday warned that he had "a lot more to do" to hurt the Chinese economy after he imposed US tariffs on $250 billion worth of goods last month.
Yuan depreciation and 'frontloading'
China's strong exports to the US were apparently supported by a fall in the value of the Chinese currency in recent months, which depreciated by about 9 percent against the dollar this year, making Chinese exports to the US cheaper.
This comes as a red-hot US economy continues to drive up the dollar, while rising US interest rates attract more and more capital and sending currencies across the globe plummeting.
In addition, China's export resilience in September was still the result of US companies ramping up on shipments before US tariffs kicked in in the middle of the month.
Read more: Sieren's China: A spiraling trade war
Betty Wang, senior China economist at ANZ in Hong Kong, said that the practice of "frontloading" was "quite obvious" on the part of US importers.
She cited a jump in exports of electrical machinery — the biggest export item from China to the US — as a sign exporters might have pushed out shipments. Chinese exports of textiles, furniture and chips also rose faster than in the previous month.
"If that's the case then I think further downside risk can be expected in the fourth quarter," Wang added.
For trade with all countries, China logged a surplus of $31.69 billion for September, compared with a surplus of $27.89 billion in August.
But already there are signs of slowing in the Chinese economy, with export orders in September falling the most in more than two years and factory output having stalled after 15 months of expansion.
To shore up growth, Beijing has pledged to increase export tax rebates from Nov. 1 for the second time this year and promised to cut corporate burden on a larger scale to help struggling Chinese firms.
Moreover, the central bank has loosened capital reserve requirements for the country's commercial banks for a fourth time this year in order to boost lending.
The measures come as the International Monetary Fund (IMF) has slashed China's growth forecast for next year to 6.2 percent from 6.4 percent amid a general cooling in the global economy and rising trade tensions.
uhe/tr (Reuters, dpa, AFP)