China’s exports growth for the month of July is expected to still have been on a fast track amid new tariffs that have been put on billions of dollars of shipments to the United States.
China made a decision on August 3 to raise tariffs on $60 billion worth of imports from the United States comprising 5,207 categories of US products such as liquefied natural gas (LNG), after the Office of US Trade Representative announced earlier to apply a higher 25 percent duty on $200 billion of Chinese products.
The escalating trade frictions between China and U.S. have agitated global markets and caused a significant impact on the global trade growth, and it seems no one would like to make substantial concessions.
Trade experts said tariffs that came into effect on July 6 for $34 billion worth of Chinese exports to the US so far are not having an appreciable impact on China’s overall exports.
The country’s July exports are estimated to register a year-on-year growth of 10 percent, slightly down from 11.2 percent in June. Although the prediction does not indicate any sharp decline, economists do see unfavorable conditions for China’s tremendous export sector.
“In addition to the tariffs impact, there might be some impact from front-loading of orders in previous months,” said Betty Wang, Senior China Economist at Hong Kong-based ANZ.
“There will be some gradual impacts that could be seen over the following months, as this is the first month the tariffs were implemented.”
It was ANZ’s forecast that China’s exports will grow 6.4 percent in July.
The $34 billion of Chinese products impacted by the new tariffs account for less than 7 percent of its total exports to America last year. However, the Trump administration has threatened to impose tariffs on all of China’s exports to the U.S., the largest export market for the world’s fastest-growing economy.
Markets have been highly concerned about the two-way trade volume between the world’s top two economies, especially China’s trade surplus with the United States, a sore point in the mutual trade relationship.
China’s surplus with the U.S. rose to a record high in June as exports were not actually hindered in the month.
The country’s imports are expected to have been up 16.2 percent in July, picking up from 14.1 percent growth a month earlier, which is likely to bring China’s overall trade surplus from $41.61 billion in June down to $39.33 billion.
China’s trade surplus with the United States is expected to continue to grow even as its total surplus has narrowed for the past two years.
China gained a $375 billion surplus in goods trade with the United States in 2017, an unacceptable level alleged by the US President Trump.
While Chinese government has vowed to take retaliations against any further U.S. measures, it has also taken active steps to consolidate economic growth and prevent from the risks of job losses arising from the trade war.
These measures could help reduce a broader impact on China’s economic growth, economists said.