China trade surplus with United States hits record high in June

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Chinese data released Friday showed that the USA trade deficit with China hit $28.97 billion in June, an increase of $4.39 billion from May, according to Reuters.

Thus far, China has imposed retaliatory tariffs on $34 billion-worth of USA imports, targeting politically sensitive goods such as soybeans.

This prompted Beijing to accuse Washington of launching the "largest trade war" in economic history, while immediately matching the U.S. tariffs dollar for dollar.

In the first six months of the year, China's exports to the USA rose 13.6% from a year earlier, while imports from the United States increased by 11.8%.

China's exports unexpectedly accelerated in June and its trade surplus with the United States hit a record high in a positive sign for the economy, though the overall result looks set to keep a bitter trade dispute with Washington on the boil for a while longer.

Companies worry the spiralling dispute might dampen global trade and economic growth.

Last Friday, Trump rolled out 25% tariffs on $34 billion of Chinese goods.

"Looking ahead, export growth will cool in the coming months as United States tariffs start to bite alongside a broader softening in global demand", Julian Evans-Pritchard, Senior China Economist at Capital Economics in Singapore wrote in a note, though he noted a weaker yuan should help offset some of the decline. "They are just a trade bully", he told reporters in Geneva. So far, encouraged by strong job growth and expectations of good quarterly earnings reports, USA markets have been strong and the Australian market has reached a 10-year record high.

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Asked if China was breaking WTO rules by imposing retaliatory tariffs on USA goods without first launching a formal legal dispute, Wang said China could not wait years for a ruling on the U.S. move and had acted "in line with the spirit of worldwide law".

Investors fear a prolonged trade battle with the United States could harm business confidence and investment, disrupting global supply chains and harming growth in China and the rest of the world.

Not unexpectedly, several readers have expressed concern about the possible impact of the introduction of new U.S. tariffs on Chinese, Canadian and European imports on Australian and world share markets.

But in a statement coming from the Chinese Commerce Ministry, The Asian nation said the surplus was overestimated and caused by America's own "domestic structural problems".

Imports grew 14.1 percent in June, customs said, missing analysts' forecast of a 20.8 percent growth, and compared with a 26 percent rise in May.

In a sign Beijing is seeking alternative supplies of the commodities as it hit USA imports with extra tariffs, China had dropped import tariffs on a range of animal feed ingredients from several Asian countries.

The United States has started a trade war and China will defend itself, Chinese vice-minister of commerce Wang Shouwen said on Thursday (July 12), urging the United States to "take the gun" of tariffs away to smooth the way for talks.

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