Wang warning comes as US trade deficit with China balloons
China's surplus with the US jumped to $21 billion last month – more than double the $10.4 billion reported during the same period last year
It appears no one bothered to hand the figures to Foreign Minister Wang Yi when he warned the United States of the dangers of a trade war with China. Just hours after his press conference on the sidelines of the National People’s Congress in Beijing, the world’s second-largest economy announced its February trade numbers with exports to the US jumping 46.1% from a year earlier.
As far as timing was concerned, it could not have come at a worse moment. Relations between Beijing and Washington have entered a decidedly frosty period with US President Donald Trump ready to roll out stiff tariffs on steel and aluminum imports.
Naturally, China has fired back with a warning salvo. “Given today’s globalization, choosing a trade war is a mistaken prescription,” Wang told the media as China’s de facto parliament, which is known as a rubber-stamp legislature, sat in the Great Hall of the People.
“The outcome will only be harmful [and] China would have to make a justified and necessary response,” he added.
In the weeks ahead, the Trump administration plans to issue a report on China’s intellectual property practices, which is expected to trigger further tariffs on a wider range of Chinese imports.
“The US is acting swiftly on Intellectual Property theft. We cannot allow this to happen as it has for many years!” President Trump tweeted hours before Wang’s comments.
He also took to Twitter to point out that the US had asked China to “develop a plan for the year of a One Billion Dollar reduction in their massive trade deficit with the United States.”
“We look forward to seeing what ideas they come back with. We must act soon!” Trump said.
Still, the amount is a drop in the Pacific ocean, which divides the two nations, when compared with the record $375.2 billion trade deficit the US racked up with China last year.
In February, the surplus with the US stood at $21 billion, official data from China’s General Administration of Customs showed, more than double the $10.4 billion reported during the same period last year.
“The bigger picture is that while China’s trade surplus with most of the world has declined during the past year … its surplus with the US has continued to expand,” Julian Evans-Pritchard, the China Economist at Capital Economics, said in a note.
Overall, the country’s exports unexpectedly surged last month at the fastest pace in three years, which suggested economic growth remains resilient.
Data showed that exports increased by 44.5% from a year earlier, compared with analysts’ median forecast for a 13.6% rise, and an 11.1% increase in January.
Imports grew 6.3%, missing analysts’ forecast for 9.7% growth, and down from a sharper-than-expected 36.9% jump in January.
But analysts cautioned that these figures could have been heavily distorted by the timing of the Lunar New Year holiday. It fell during February this year compared to January in 2017.
“Global demand remains robust and the economies of the US and Europe are expanding, that’s the biggest boost for Chinese exports,” Xia Le, the chief Asia economist at Banco Bilbao Vizcaya Argentaria in Hong Kong, told Bloomberg.
“The risk of a trade war in which Trump increases tariffs for a broader scope of products seems to be rising,” Xiao signed off on a cautious note.
– with Reuters and AFP