Record surplus risks more China-US tension

Yawen Chen and Elias Glenn

China's trade surplus with the United States swelled to a record in June as its exports accelerated broadly, a result that could further inflame a bitter dispute with Washington.

The data came after US President Donald Trump raised the stakes on Tuesday, saying he would slap 10 per cent tariffs on an extra $US200 billion ($A270 billion) worth of Chinese imports.

China's surplus with the United States, which is at the centre of the tariff tussle, widened to a record monthly high of $US28.97 billion, up from $US24.58 billion in May, according to official data back to 2008.

Trump has demanded Beijing cut its trade advantage and the latest result could further inflame tensions after both sides last week imposed tit-for-tat tariffs on $US34 billion of goods.

Washington warns it may ultimately impose tariffs on more than $US500 billion worth of Chinese goods - nearly the total amount of US imports from China last year.

The dispute has raised worries a full-scale trade war could derail the world economy.

Chinese stocks fell into bear market territory and the yuan currency has skidded, though there are signs its central bank is moving to slow the currency's declines.

China's June exports rose 11.3 per cent from a year earlier, beating forecasts for a 10 per cent increase and down from a 12.6 per cent gain in May.

"Looking ahead, export growth will cool in the coming months as US tariffs start to bite alongside a broader softening in global demand," Julian Evans-Pritchard at Capital Economics said.

After a strong start to the year, growth in China's exports has moderated and is expected to face more pressure from the initial round of US tariffs.

China's foreign trade faces risks of slowing in the second half of the year, General Administration of Customs spokesman Huang Songping said.

Analysts expect shipments growth to slow in the second half of the year, putting more strain on an economy already feeling the pinch from a multi-year debt battle.

Investors fear a prolonged battle with the United States could harm business confidence and investment, disrupting global supply chains and harming growth.

China's commerce ministry confirmed last month Chinese exporters were front-loading shipments to the US to get ahead of expected tariffs.

Imports grew 14.1 per cent in June, customs said, missing analysts' forecast of a 20.8 per cent growth.

The commerce ministry also says it will use funds collected from tariffs on US imports to help ease the impact of actions on Chinese companies.

The ministry encouraged companies to increase import of soybean, soymeal, vehicles and aquatic products from other markets.

In a sign Beijing is seeking alternative supplies as it hit US imports with extra tariffs, China had dropped import tariffs on a range of animal feed ingredients from several Asian countries.

China's exports to the United States rose 13.6 per cent in the first half of 2018 from a year earlier, while its imports from the US rose 11.8 per cent.