Chinese exports accelerate even as Trump escalates trade war

By and Ben Blanchard

(Reuters) – China’s exports surged more than expected in July despite U.S. duties and its closely watched surplus with the remained near record highs, as the world’s two major economic powers ramped up a bitter dispute that some fear could derail global growth.

In the latest move by to put pressure on to negotiate trade concessions, is set to begin collecting 25 percent tariffs on another $16 billion in Chinese goods on Aug. 23.

Wednesday’s Chinese data provide the first readings of the overall trade picture for the world’s second-largest since U.S duties on $34 billion of Chinese imports came into effect on July 6.

All the same, China’s exports for July rose a bigger than expected 12.2 percent year-on-year, showing little impact for now and beating June’s 11.2 percent rise and analysts expectations in a poll for 10 percent growth.

Of more direct consequence in the Sino-U.S. trade war, China’s surplus with the shrank only marginally to $28.09 billion last month from a record $28.97 billion in June. has long criticised China’s trade surplus with the and has demanded cut it.

Those demands could get even more strident if the yuan’s sharp drop in recent months raises the ire of the United States, which has in the past repeatedly criticised Beijing for manipulating its currency to gain an unfair trade advantage.

Economists say appears to be taking a more hands-off approach to the yuan, which marked its worst 4-month fall on record between April and July and has provided some reprieve for exporters in the face of the rising trade tensions.

ANZ senior said Beijing will likely resist using its closely managed currency as a tool in the trade war.

“Currency devaluation, which may have helped exports to some extent, has been largely market-driven in our view and is not a by Chinese policy makers as part of the retaliation measures,” Wang said.

China’s trade with the U.S. also continued to rise in July despite the tariffs, with exports up 11.2 percent year-on-year, and imports increasing 11.1 percent.

Analysts still expect a less favourable overall trade balance for in coming months given it’s early days in the brawl.

BEIJING BOOSTS LIQUIDITY SUPPORT

After a strong start to the year, growth in the world’s second-largest cooled slightly in the second quarter, partly hit by the government’s years-long efforts to tackle debt risks.

China’s imports rose 27.3 percent year-on-year in July, in a sign domestic demand remains solid, but the worry is that the escalating Sino-U.S. trade war, rising corporate bankruptcies, and a steep decline in the yuan could put a significant dent on the

The government has responded by releasing more liquidity into the system, encouraging lending and promising a more “active” fiscal policy.

World financial markets have taken a battering in recent months as fears grow that Trump’s “First” policies could derail a global economic revival.

Several large American companies have said they would adjust their to source outside of China if tariffs on Chinese goods impacted them, while China’s said rising amid hefty U.S. import tariffs was driving up costs for its business in

In a sign there may be more difficulties ahead, a private survey last week found that the business outlook among Chinese services firms was the second-weakest on record in July in part due worries about the trade war.

“STICK OF HEGEMONY”

China has repeatedly warned it will strike back against any further punitive measures by Trump, saying the United States is threatening the global free trade order with its

Chinese state media, reflecting the government’s stance, has said China will not be cowed in the face of U.S. threats.

The latest commentary from on Wednesday took a softer line after resorting to personal attacks against Trump earlier in the week, saying China could get through the storm but refrained from directly mentioning the U.S.

All China’s published a lengthy commentary by the official Xinhua agency, entitled “declaration”, on their front pages.

“Certain people go against the tide for their own private ends and go against morality; the barrier of tariffs wantonly rise, and the stick of hegemony is raised all around,” the commentary said.

“Although this may for a moment bring preening with delight, it will make it hard to resolve economic imbalances or out of kilter politics and other deep-rooted problems,” it said.

China has not yet given a date for its previously announced retaliatory tariffs on $16 billion in U.S. goods, which will target commodities such as crude oil, natural gas, coal and some

The latest $16 billion list from the United States will hit from China, even though many of the in these products originate from the United States, or

John Neuffer, and CEO of the Semiconductor Industry Association, said in a statement they were disappointed and puzzled why remain on the final list.

“We have made the case to the Administration, in the strongest possible terms, that tariffs imposed on imported from China will hurt America’s chipmakers, not China’s, and will do nothing to stop China’s problematic and discriminatory trade practices,” he said.

(Editing by & Shri Navaratnam)

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)