China exports rebound, trade surplus with US swells

China's exports rebounded in April and its politically sensitive monthly trade surplus with the United States grew for the first time in five months as Beijing and Washington haggled over the chronic imbalance.

US officials visited Beijing last week for talks on cooling rising tensions between the world's two largest economies over trade and technology issues. Those meetings appeared to make scant progress, but further discussions are scheduled to resume next week.

China's foreign ministry said that a planned visit by President Xi Jinping's top economic adviser, Liu He, to Washington next week shows the US hopes to "reach a consensus" with Beijing on trade and economic issues.

"It is a positive signal," ministry spokesman Geng Shuang told reporters.

The data released by China on Tuesday showed its trade surplus with the US totalled US$80.4 billion in January-April, up from US$50 billion in the same period last year. President Donald Trump's demands that China slash its surplus with the US have become a cornerstone of his combative economic policy.

In April, the trade surplus with the US swelled to US$22.2 billion, up from US$15.4 in March and the first increase since November, as exports to the US grew at a double digit pace.

China's total exports jumped 21.5 per cent in April from the same month the year before, bouncing back from a contraction the previous month thanks to resurgent global demand.

Imports expanded 12.9 per cent year-on-year in dollar terms, leaving the country's global trade surplus for the month at US$28.8 billion, a turnaround from a US$5 billion deficit the month before.

Hard-line demands

Among the list of hard-line demands that Trump's delegation handed China last week was an ultimatum to cut US$200 billion from its annual trade surplus with the US by 2020. Last year's merchandise trade surplus totalled US$375 billion, according to US data, while Chinese statistics put it at about US$276 billion.

The widening surplus "reflects the difficulty of closing the trade gap between the two countries in the near term, but it is unlikely to obstruct the constructive progress made recently" in negotiations between Washington and Beijing, ANZ Bank's senior China economist, Betty Wang, said in a research note. The high-level meetings are "constructive moves in the right direction" to resolve the tensions, she said.

After last week's meeting, China's Commerce Ministry said the two sides had agreed to establish a mechanism to try to resolve their dispute, though differences remained.

Trump has threatened to hike tariffs on US$150 billion in Chinese imports. China's communist leaders have countered by outlining US$50 billion in US goods that they would target with retaliatory duties on goods including aircraft and soybeans.

Chinese buyers are cancelling orders for US soybeans, a trend that could deal a blow to American farmers if it continues.

At the same time, farmers in China are being encouraged to plant more soy, apparently to help make up for any shortfall from the United States.

It can take a month or longer for soybean shipments to travel from the US to China. Any soybeans en route to China now could be hit by the tariff by the time they arrive.

"The Chinese aren't willing to buy US soybeans with a 25 per cent tax hanging over their head," said Dan Basse, president of AgResource, an agricultural research and advisory firm. "You just don't want the risk."