China' trade surplus with the United States ballooned unexpectedly to $28.97 billion in June, the highest surplus on record, according to data supplied by China. This surprising statistic comes in the wake of a steadily worsening trade dispute between China and the U.S. that began in June and was exacerbated in July with the imposition of American tariffs.
This surplus was 18 percent higher than China's $24.58 billion surplus in May. China revealed its exports to the U.S. rose 5.7 percent year-on-year, while imports from the U.S. increased by four percent.
China said both its imports and exports with the U.S. rose in the first half of 2018. China had a $375 billion trade surplus in goods with the U.S. in 2017. Last month, China's Ministry of Commerce confirmed that Chinese exporters had front-loaded shipments to the U.S. to skirt the expected.
The news is bound to be greeted with dismay by Washington and came after the Trump administration escalated its trade dispute with China on July 10, saying it would impose tariffs of 10 percent on an extra $200 billion worth of Chinese imports, including a wide swath of consumer items.
Analysts said the growth in China's exports has slowed, however, and is expected to face more downward pressure from the initial round of U.S. tariffs. Both official and private business surveys reported weaker export orders in June as the trade spat heads out of control.
Analysts also expect China's export growth to decelerate in the second half of the year. This slowdown will likely increase the pressure on an economy already reeling from a painful battle to reign in its massive debt, which is also choking-off funding and driving-up corporate borrowing costs.
Investors fear a prolonged trade war with the U.S. will harm business confidence and investment, disrupting global supply chains and harming growth in China and the rest of the world, as well.
Analysts said exporters rushed shipments before tariffs went into effect on July 6, and believe the spike in the surplus was a one-off. A less favorable trade balance for China in the coming months is expected as duties on exports start to crimp Chinese exports to the U.S.
