China’s trade surplus with the United States ballooned to a record $34.1 billion in September, despite a raft of U.S. tariffs, official data showed on Friday, adding fuel to the fire of a worsening trade war.
Relations between the world’s two largest economies have soured sharply this year, with U.S. President Donald Trump vowing on Thursday to inflict economic pain on China if it does not blink.
China’s exports to the U.S. rose to $46.7 billion while imports slumped to $12.6 billion, according to China’s customs administration. The world’s top two economies imposed new tariffs on a massive amount of each other’s goods mid-September, with the U.S. targeting $200 billion in Chinese imports and Beijing firing back at $60 billion worth of U.S. goods.
“China-U.S. trade friction has caused trouble and pounded our foreign trade development,” customs spokesman Li Kuiwen told reporters on Friday.
China’s overall trade—what it buys and sells with all countries including the U.S.—logged a $31.7 billion surplus, as exports rose faster than imports.
Exports jumped 14.5 percent for September on-year, beating forecasts from analysts polled by Bloomberg News, while imports rose 14.3 percent on-year.
While the data showed China’s trade remained strong for the month, analysts forecast the trade war will start to hurt in coming months. “The big picture is that Chinese exports have so far held up well in the face of escalating trade tensions and cooling global growth, most likely thanks to the competitiveness boost provided by a weaker renminbi [yuan],” said Julian Evans-Pritchard, China economist at Capital Economics. “With global growth likely to cool further in the coming quarters and U.S. tariffs set to become more punishing, the recent resilience of exports is unlikely to be sustained,” he added.
Trump accused China of thinking Americans are “stupid” and boasted that his tariffs had already “had a big impact” on China’s stumbling economy in a Thursday interview on Fox News. “I have a lot more to do if I want to do it. I don’t want to do it but they have to come to the table,” he warned.
The yuan has fallen for weeks against the U.S. dollar, dropping nine percent in the past six months, which mitigates the rise in the price of Chinese goods caused by punitive U.S. tariffs.
U.S. Treasury Secretary Steven Mnuchin, in comments published in the Financial Times this week warned China against engaging in competitive currency devaluations.
China has steadfastly denied that it has manipulated the yuan to cope with the tariffs. The U.S. dollar has strengthened against a range of currencies this year as American interest rates have risen.
China’s stock market has plunged this year but the trade war has also started to erode Trump’s oft-touted U.S. stock gains, with the Dow Jones Industrial Average down more than five percent for the week.
The International Monetary Fund (IMF) this week cited the trade war as it lowered its 2019 growth forecast for China, which is set to see its slowest expansion since 1990. The IMF also lowered estimates for the United States and the global economy as a whole.