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China's September export growth tops forecasts, surplus with US record high

A worker transporting steel cables at a steel factory in Nantong, China. Photo: Getty Images

China reported on Friday an unexpected acceleration in export growth in September and a record trade surplus with the United States, which could exacerbate an already-heated dispute between Beijing and Washington.

September exports rose 14.5 percent from a year earlier, Chinese customs data showed. That blew past forecasts for an 8.9 percent increase in a Reuters poll and was well above August's 9.8 percent gain.

Growth in imports for September instead showed a moderate slowdown to 14.3 percent from 19.9 percent in August, slightly missing analysts' forecast of a 15 percent growth.

China's trade surplus with the United States widened to a new record $34.1 billion in September, compared with $31.05 billion in August

Chinese exports to the United States have stayed relatively strong despite being hit by US punitive tariffs in a fight over American complaints about Beijing's technology policy.

September marked the second straight month the Chinese trade surplus with the United States set a record.

For January-September, China's trade surplus with the United States was $225.79 billion, compared with about $196.01 billion in the same period last year, Reuters calculations showed.

Despite escalating trade tensions with the United States, Chinese data showed the economy has largely held up so far.

Economists say that the phenomenon is mostly due to exporters benefiting from increased orders before the tariffs hit, but the figures are likely to show stress in the months ahead.

The United States and China imposed new tit-for-tat tariffs against each other's goods in late September, the latest escalation in a heated trade war between them.

The Trump administration placed tariffs of 10 percent on the $200 billion of Chinese products, with the tariffs to go up to 25 percent by the end of 2018. Beijing's new levies will be 5-10 percent.

The two countries already exchanged tariffs on $50 billion worth of each other's goods earlier this year.

Even though the United States and China do not appear to be near a resolution in their trade discussions, the impact of US tariffs on Chinese total industrial production will be limited, said Zhang Zhiwei, Deutsche Bank's chief economist and head of equity strategy for China.

If Trump imposes tariffs on an additional $267 billion of Chinese imports into his country, the Asian powerhouse's exposure to the US market would only be 2 percent of its total industrial production, according to a study by Zhang.

So China's "focus now is to try to retain supply chains that support the rest of the world" that make up 25 percent of the country's total industrial production, Zhang told CNBC, citing the example of Apple iPhones exported to Europe.

For trade with all countries, China logged a surplus of $31.69 billion for September, compared with forecasts in a Reuters poll for $19.4 billion and August's surplus of $27.89 billion.

The International Monetary Fund on Tuesday cut its global economic growth forecasts for this year and next, saying that the US-China trade war was taking a toll. It also slashed China's growth forecast for next year to 6.2 percent from 6.4 percent.

China will cut import tariffs on a wide range of goods beginning on November 1, as part of Beijing's pledge to take steps to increase imports this year amid rising tension.

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