China's trade surplus with US surges, calls for patience

BEIJING: China’s trade surplus with the United States surged by a fifth in the first three months of the year with Beijing calling on Washington on Friday to be patient as tensions between the economic superpowers simmer.

Fears of a trade war have been rumbling since last month as President Donald Trump has threatened a series of tariffs on hundreds of billions of dollars of Chinese goods, sparking tit-for-tat warnings from Beijing.

The stand-off lies in the Trump administration’s ire at the massive trade imbalance and what it considers unfair practices by China that he says are costing American jobs.

President Xi Jinping’s vow this week to cut tariffs in some sectors, and Trump’s warm response, have calmed some concerns — but a vast gulf in expectations remains between the two nations.

The latest data showed China continues to benefit from the two-way trade. Its surplus with the US rose 19.4 percent on-year to $58 billion in January-March, with exports up 14.8 percent and imports 8.9 percent higher, according to a spokesman for the customs administration.

However, for March the surplus fell to $15.4 billion from February’s $21 billion, while it was also down from $17.7 billion 12 months ago.

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China registered a rare deficit of $4.98 billion with the rest of the world last month owing to seasonal factors such as the Lunar New Year holiday.

China’s global exports fell 2.7 percent for the month, while imports grew 14.4 percent — the early year hiccup in exports is normal with the long holiday disruptions, analysts say.

Against the backdrop of recent tensions, customs administration spokesman Huang Songping repeated China’s line that it is not looking for an advantage over its trading partners.

“We don’t strive for a favourable balance of trade (for China), the current state of trade affairs are shaped by the market,” he told a briefing in Beijing.

“We hope that the US will listen patiently to rational and pragmatic voices on the trade balance issue.”

He reiterated that China does not want a trade war, saying “this trade friction is not conducive to China’s interests, nor is it conducive to the interests of the US”.

‘Run out of bullets’

After Trump unveiled another set of planned tariffs last Friday, Xi this week struck a conciliatory note, promising to cut tariffs on cars — a key point of US anger — and other imports, as well as further open up the economy.

Xi “said he’s going to open up China. He’s going to open it up, take down a lot of the trade barriers — maybe all of them”, Trump told lawmakers on Thursday.

However, Chinese officials have in recent days repeated that the two sides were not negotiating on the issue.

The US has not “shown the sincerity needed for negotiations”, commerce ministry spokesman Gao Feng said Thursday.

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Trump has portrayed the issue in a more favourable light.

“Again, we’re doing really well with China. I think we’re having some great discussions,” he told the gathering of lawmakers in Washington, though he repeated that the US would win a trade war between the two sides.

“When you’re $500 billion down, you can’t lose a trade war,” he said.

“We put a $50 billion tariff on, and then we put $100 billion tariff on. And, you know, at a certain point, they run out of bullets.”

During Trump’s first year in office the surplus reached record highs — $375 billion by US counting, or $276 billion according to Chinese data.

So far the large threats wielded by both sides have not been implemented.

Only $3 billion in goods have been slapped with tariffs in the escalating spat — the US targeted steel and aluminium while China took aim at pork and wine among a slew of other American products.

Trade between the two nations remained strong in the first quarter, with bilateral exchanges rising 13 percent to $142 billion.

But the threatened tariffs would dent economic growth on both sides of the Pacific, analysts say.

“The implications of such a wide-ranging tariff war would be significant,” said economists at Fitch Ratings, adding that the levies could pull down gross domestic product by two percentage points over two years.