China's trade surplus with USA widens to record $34.1bn

White House National Economic Council Director Larry Kudlow holds a news briefing

Despite a worsening tariff war, China's trade surplus with the United States has widened to a record $34.1bn in September.

The September surplus with the USA was larger than China's overall trade surplus of $31.69 billion for the month.

China's trade surplus with the United States was $225.79 billion from January-September.

China's large trade surplus with the United States has always been a sore point with Washington and is at the center of an increasing bitter dispute between the world's two biggest economies.

The second round of tariffs that the Trump administration imposed on China came into effect only on September 24, so the increase in exports last month might have been the result of Chinese companies rushing to sell their products before the additional duties were added.

It was about $196.01 billion in the same period a year ago. China then hit back with tariffs on about $60-billion of US imports.

The yuan has lost almost 10 percent of its value against the U.S. dollar this year.

"We expect both to soften in the coming quarters", he said.

Analysts say a sharp depreciation of the yuan has also helped China weather the tariffs by making its exports cheaper.

"With global growth likely to cool further in the coming quarters and United States tariffs set to become more punishing, the recent resilience of exports is unlikely to be sustained", he said.

"The big picture is the Chinese exports have so far held up well in the face of escalating trade tensions and cooling global growth, most likely thanks to the competitiveness boost provided by a weaker renminbi", said Julian Evans-Pritchard, senior China economist at Capital Economics. President Trump has warned there's a lot more he could do to hurt China's economy.

"I don't want to do it, but they have to come to the table", he continued.

Separately, on Fox News, President Trump made it clear the pressure will continue: "They lived too well for too long and, frankly, I guess they think that the Americans are stupid people".

They are also promoting settlements in rubles and yuan, bypassing the USA dollar and other Western currencies.

The International Monetary Fund on Tuesday cut its global economic growth forecasts for this year and next, saying that the U.S-China trade war was taking a toll.

The IMF also lowered estimates for the United States and the global economy as a whole.

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