Published: Wed, January 16, 2019
Business | By Pearl Harrison

Record US-China trade gap may signal slower global growth

Record US-China trade gap may signal slower global growth

Exports rose 7.1 per cent year on year to 16.42 trillion yuan last year but at the same imports grew 12.9 per cent to 14.09 trillion yuan, resulting in a trade surplus of 2.33 trillion yuan, which narrowed by 18.3 per cent.

China's trade surplus with the United States shot up by 17.2 percent in 2018 compared to the year before, according to Chinese data released on Monday, reaching a record-breaking $323.3 billion (€281.9 billion). The deficit that the USA has with China is likely even bigger than these figures indicate since China calculates the numbers using different methods, sometimes excluding goods that end up in the US via other countries.

Last week, the Chinese commerce ministry said that mutual trade between the countries in December reached $100 billion for the first time ever.

ING said a fall in electronic shipments could be related to foreign companies avoiding using China-made electronic components, adding that exports and imports of electronic parts and goods will likely shrink this year.

Analysts had expected export growth to slow to 3 per cent with imports up 5 per cent. Sales to the USA market had kept growing by double digits in previous months as Chinese exporters rushed to fill orders.

US President Donald Trump speaks to reporters on the South Lawn of the White House in Washington, US, November 2, 2018.

But penalties of up to 25 percent already imposed on billions of dollars of each other's goods remain in place, raising the cost for American and Chinese buyers of soybeans, medical equipment and consumer goods, from purses and bicycles to furniture and tech gear.

Beyond the tariffs battle with the U.S., China's economy has been facing its own domestic headwinds. However, upon closer look, the statistics noted a drop in Chinese exports and imports.

In December, China's global exports shrank 4.5 percent to $221.2 billion while imports declined 7.2 percent to $164.2 billion.

While the surplus with the USA may have risen, last year's overall Chinese trade surplus was the lowest since 2013, even though export growth was the highest since 2011, according to Reuters' records. China's global trade surplus for 2018 was $351.76bn, the lowest since 2013, despite the fact that export growth was the highest since 2011, according to Reuters. For all of 2018, soybean, the second largest imports from the U.S., fell for the first time since 2011.

In an annual meeting of top leaders last month, China said it will boost support for the economy in 2019 by cutting taxes and stepping up policy adjustments.

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