Trading News

US Trade Deficit Grows to Record Level

As the ongoing trade negotiations between the United States and China are giving both the parties some positive results, the new data by China may rock the relationship between the two largest economies in the world. China announced on Monday that it has the largest trade surplus with the United States breaking the record of the last decade, despite trade barriers imposed by the Trump administration on China.

According to government data, China’s trade surplus with the United States has grown by 17 percent in 2018 from 2017 and managed to touch $323.32 billion. And, it is the highest trade surplus since 2006. The deficit that the United States has with China must be a lot bigger than the figure released by China as China uses a different calculation method. It doesn’t consider the goods end up in the United States through other countries.

As per the data, exports to the United States rose 11.3 percent in 2018 whereas imports from the United States rose by a minimal 0.7 percent throughout the last year.

China confirmed that its overall trade surplus stands at $3351.76 billion for 2018 and exports inflated by 9.9 percent from 2017 and imports grew by only 15.8 percent over the same period.

According to Reuter’s records, China has the lowest overall surplus in 2018 since 2013, though the surplus with the United States increased. For 2018, the export growth also rose by the highest percentage since 2011.

China’s General Administration of Customs labeled external uncertainty and protectionism as the reason for this. It has been predicted that China will have slower growth in 2019.

Customs spokesman Li Kuiwen said Asia’s largest economy is growing steadily in 2019, but there are certain external headwinds it would have to face.

These data are being watched carefully to know the depth of damage inflicted by the ongoing trade war between the United States and China. As of now, it is evident that production metrics and export orders are falling owing to the trade dispute with the United States, as it is the largest trading partner of China.

Chinese Export and Imports-

China has experienced the biggest fall in exports in two years. It fell down by 4.4 percent in December from November.

Imports also contracted by 7.6 percent in December from November, making it the biggest decline since July 2016.

The trade surplus in November was $44.71 billion for China, and in December it had a surplus of $57.06 billion in trade while the analysts’ expectations were on the line of $52 billion.

As per the analysts, Chinese exports have not managed to sustain the November growth of 5.4 percent. It had a growth of 3 percent in December.

Import has seen an increment as well in December in comparison with November. It had risen by 5 percent in December whereas the rise in November was 3 percent.

Julian Evans-Pritchard, a senior China economist at Capital Economics, said exports in China fell because of the global slowdown and complex situation at the US trade scenario, whereas imports declined due to cooling of domestic demand.

China’s December trade surplus with the United States was $29.87 billion, and in November it has a whopping $35.54 billion as trade surplus.

Blaming the tariff war with the United States would be an injustice as China has its own domestic headwinds. Even China has accepted slowing down of growth, and it has been trying to manage the slowdown.

As of now, both sides are on the table negotiating the best terms for trade. Trump has been vocal about the rising trade deficit with China since his electoral campaigning. With more slowdown of the global economy in the year ahead, export for China will be low even if it manages to make a deal to get conducive tariff from the United States.

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