China-U.S. Trade Gap Grew to Biggest Ever in 2018

Donald Trump's trade war hits Chinese exports

Donald Trump's trade war hits Chinese exports

Chinese exporters also face pressure from cooling consumer demand in other global markets.

China's December exports unexpectedly fell 4.4 percent from a year earlier, the biggest monthly drop in two years, official data showed on Monday, pointing to further weakening in the world's second-largest economy.

However, customs' data for December also showed that exports to the U.S. dropped 3.5 percent compared with December of the previous year, possibly due to United States tariffs on an array of Chinese goods.

Despite the levies, exports to the USA grew 11.3% a year ago while imports rose 0.7%, expanding the surplus to $323.3 billion from $275.8 billion in 2017, customs data show.

"The export growth print also suggests that the recent strength of the yuan might be short-lived; Beijing will perhaps be more eager to strike a trade deal with the United States; and that policymakers will need to take more aggressive measures to stabilise GDP growth".

China's trade surplus with the U.S. widened previous year, while the country's imports and exports fell in December as the trade war begins to bite in the world's second biggest economy.

However, in a sign that the White House's measures are having an impact, China's exports to the USA sank last month. China has retaliated with tariffs of its own.

The data raises questions about the success of the trade war and increased tariffs imposed by US President Donald Trump against China in an attempt to reduce the US trade deficit. "We expect both to remain weak in the coming quarters", Capital Economics said in a note. Absent the tariffs, it is likely the surplus would have been even higher.

China's export growth is expected to have eased for a second straight month in December as global demand weakened, raising pressure on Beijing as it tries to reach a trade deal with Washington.

Sources told Reuters last week that Beijing is planning to lower its economic growth target to 6-6.5 per cent this year after an expected 6.6 per cent in 2018, the slowest pace in 28 years.

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