Trump’s China tariffs massively backfire as trade deficit smashes record high

Trump’s China tariffs massively backfire as trade deficit smashes record high

However, the trade surplus between China and the United States widened to US$34.1 billion in September, according to official data released by Beijing on Friday. China then hit back with tariffs on about $60-billion of US imports.

Overall export growth accelerated to 14.5% on the year from less than 10% in August, with even export growth to the US picking. Imports of American goods increased 9 percent to $12.6 billion, down from 11.1 percent. The Trump administration has also accused China of trying to undermine the president ahead of next month's congressional elections, something Beijing has denied. Imports grew 14.3 percent to $195 billion, down from the previous month's 20.9 percent rate.

"If the U.S. sold four Ford-class aircraft carriers priced at $15bn (£11.4bn) each, it would easily make up for the $60bn trade deficit with China", said the editorial in The People's Daily, a Chinese state media outlet and Communist party mouthpiece.

Relations between the world's two largest economies have soured sharply, however, with Trump earlier Thursday vowing to inflict economic pain on China if it does not blink in a trade war.

The Chinese yuan has lost almost 10 percent of its value against the USA dollar this year.

The jibe hits at a sensitive area for the U.S. and other Western nations long concerned with protecting intellectual property and preventing improper technology transfer to China lest Beijing gain a competitive advantage.

The trade feud has been fueled by U.S. accusations that China engages in cyber-theft and coerces foreign companies into handing over technology in return for access to the Chinese market, as well as by Trump's anger over China's trade surplus with the U.S. It is far from clear that the U.S. might be preparing to consider lifting penalty tariffs on about $250 billion of Chinese products.

Credit rating agencies are becoming increasingly concerned about the potential impact of the escalating trade war between the United States and China as it looks to be more protracted and deeper than some had hoped.

The yuan has lost almost 10 percent of its value against the US dollar this year.

For January-September, China's trade surplus with the United States was $225.79 billion, compared with about $196.01 billion in the same period past year. The tariffs are set to rise to 25 percent in January if the trade dispute is not resolved by then, and Trump has vowed to impose tariffs on the remaining $267 billion worth of Chinese imports.

The politically-sensitive surplus was $34.13 billion in September, surpassing the record of $31.05 billion in August.

This week, China's central bank reduced the cash reserves that banks must hold to boost lending.

Growth in China's factory sector in September stalled after 15 months of expansion, with export orders falling the most in more than two years, a private business survey showed.

"Although Chinese manufacturing output continued to rise in September, the latest expansion was only marginal and the weakest recorded for almost a year", the survey said.

With China's manufacturing sector cooling and export orders shrinking, Beijing has pledged to increase export tax rebates from November 1 for the second time this year and promised to cut corporate burden on a larger scale to help struggling Chinese firms.

In a separate report released on Friday, the International Monetary Fund (IMF) cut its expectations for China's GDP growth by 0.2 per cent for 2019, citing the ongoing trade tensions.

China's overall export growth accelerated, temporarily defying forecasts of a slowdown as the global economy and consumer demand cool. Otherwise, China's export performance as of September is steady, and a bit disappointing in the case of non-Japan Asia.

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