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article imageChina's trade surplus with US eases as Trump visits

By Ryan MCMORROW, Ben Dooley (AFP)     Nov 8, 2017 in Business

China's trade surplus with the United States eased slightly in October but still remains elevated, official data showed Wednesday, as President Donald Trump arrived in Beijing for what are expected to be thorny economic talks.

Trump is expected to seek ways to reduce the huge US trade deficit in his discussions with Chinese President Xi Jinping during his first, three-day state visit to Beijing.

As Trump toured the Forbidden City, his commerce secretary Wilbur Ross joined his Chinese counterpart Wang Yang in Beijing's Great Hall of the People to oversee the signing of $9 billion of deals for everything from Montana beef to water purification equipment.

"Addressing the imbalance in China trade has been the central focus of collaborative discussions between President Trump and President Xi," Ross said, while Wang described the event as a "warmup" before an even larger signing ceremony Thursday.

The two leaders are expected to oversee the conclusion of around $20 billion of agreements, including major deals to export natural gas and soybeans.

While the numbers are big, the multi-year deals are a drop in the bucket of the overall trade imbalance.

China's trade surplus with the United States has ballooned in recent months as optimistic Americans splurge on China-made products.

The balance in trade again tilted heavily in China's favour in October, hitting $26.6 billion, up 10.0 percent on-year, according to customs data.

And while it was down from September's $28.2 billion, that figure marked the highest monthly surplus in at least three years. Bloomberg News said the figures mean China's surplus with the US could come in around the same as last year's $250 billion.

- Important ballast -

Trump repeatedly railed against China's trade surplus during the 2016 presidential election but his belligerence on the issue has been tempered since taking office.

Peter Navarro, the White House China hawk who authored the book "Death by China", was notably left from the Beijing travel list.

Wang emphasised the importance of deals like the ones signed Wednesday for their role in keeping the two countries' relations on a solid footing.

They are "an important ballast for the overall bilateral relationship", he said, adding he believed they would contribute to its "stabilisation".

Bloomberg Economics Chief Asia Economist Tom Orlik said in a note: "The bilateral trade balance remains tilted in China's favour. Expectations that the Trump trip will do anything to fix the problem are low."

Last week, the US imposed fresh tariffs on China's aluminium foil exports, with the Commerce Department announcing the Trump Administration has initiated 77 antidumping and countervailing duty investigations since January.

China's trade with the wider world remained strong last month, with its exports to a booming global economy growing 6.9 percent on-year, while imports swelled 17.2 percent.

The figures fell short of the expectations of analysts surveyed by Bloomberg News and both figures demonstrated a slowdown from last month.

"The big picture is that both outbound and inbound shipments have softened recently, a trend that continued last month," Julian Evans-Pritchard, China economist at Capital Economics wrote in a note.

China's transition from an investment and export driven economy to a consumption fuelled economy is well underway though.

"China is relying much less on exports to generate growth," Zhang Longmei, a China-based economist for the International Monetary Fund, said at a press briefing last month. "Services is a much more important pillar of the economy."

China's economy has reported a stream of upbeat data in recent months.

Growth in the third quarter came in at 6.8 percent, with analysts expecting China's 2017 yearly expansion to edge up from last year.

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