China-US trade gap widened further in August

HONG KONG – in a comment on China’s August trade data, ANZ Bank research says the numbers may put China’s trade negotiator into a difficult situation. Although China’s total export growth declined to 9.8% y/y from July’s 12.2% y/y, the China-US trade surplus rose to a historical high of USD31.1 billion, lifted by 13.2% export growth (July 11.2%).

 China’s imports from the US, however, slowed to 2.3% y/y in August from 11.1% in July.

ANZ say it reviewed the US’s proposed tariff list on an additional USD200 billion worth of Chinese goods and found that the plan will likely affect 43% of China’s exports to the US, an impact, it says, which cannot be neglected.

“We picked the top five items that the US imports from China to represent its total imports from China (based on US data). These items account for 65% of the US’s total imports from China.

“From January to July 2018, items on the tariff list among the top five items amounted to USD77.2 billion, or 43%, of the top five items, even higher than 2017’s level.”

ANZ says the latest tariff list does not include some big and sensitive items, leaving room for further action from the US.

“While USD200 billion cannot be ignored, the latest tariff list does not include cell phones, keyboards and some consumer goods such as toys,” the report says.

“This may be a concession to US consumers and companies, but it also leaves room for the US to impose further tariffs in the future.

“As President Trump indicated over the weekend, he’s ready to consider the other Chinese exports, if he feels it is needed.”

ANZ says it does not expect Chinese authorities to retaliate with competitive devaluation.  www.live.anz.com (ATI).