China’s trade surplus with US narrows in January

Washington has already imposed a range of tariffs on Chinese-made goods. (AFP pic)

BEIJING: China’s trade surplus with the US narrowed in January even as its American imports continued to plunge, official data released on Thursday showed, as officials from the world’s top two economies sat down for crucial trade talks in Beijing.

China’s exports across the Pacific fell more than 2% in January from a year earlier, data from the customs administration showed, after shrinking in December.

Still, China’s trade surplus with the US for the month stood at US$27.3 billion. Last year it hit a record US$323.3 billion.

It is a major source of anger within the Trump administration, which imposed tariffs on hundreds of billions of dollars worth of Chinese goods last year and has threatened more to come.

Officials from the world’s top two economies are holding negotiations in Beijing on Thursday and Friday in a bid to resolve their thorny trade dispute.

Trump in December postponed plans to sharply hike tariffs on US$200 billion of Chinese imports until March 1 to allow more time for negotiations. This week he indicated he was open to extending the trade truce depending on progress in Beijing.

“Based on the positive signals from the US-China trade negotiations, further tariff hikes will likely be suspended,” noted Louis Kuijs of Oxford Economics, adding he expected continued pressure on exports due to a global slowdown and the existing US tariffs.

Global trade

China’s exports to the world – all countries including the US – unexpectedly rose 9.1% in January from a year earlier, turning a corner after exports fell in December.

“One possible explanation for January’s upbeat export data could be some re-arrangement of regional supply chains on the back of the ongoing China-US trade dispute,” said Betty Wang, an economist at ANZ bank.

Exports to Europe and ASEAN countries surged, she wrote in the research note.

China’s imports, however, continued to fall in January, down 1.5% from a year earlier, though at a slower pace than a 10.2% decline forecast by Bloomberg News.

“The import slowdown in recent months obviously in part reflects the slowdown in China’s domestic economy,” said Kuijs.

A slew of bad economic data has added to concerns about China’s economy, which grew at its slowest pace in almost three decades last year.

Analysts cautioned that it is difficult to compare trends at the start of each year due to the Chinese New Year holiday, which came in early February this year and can affect business activity.

“The broad trend in shipments still appears to be pointing down,” said Julian Evans-Pritchard of Capital Economics.

“The downbeat outlook for global growth means that this year is likely to be challenging for Chinese exporters, even if the ongoing US-China trade negotiations culminate in a deal,” Evans-Pritchard wrote in a research note.