Opinion

Markets can cheer: China appears to finally be addressing its US trade surplus

By Dr. Michael Ivanovitch for CNBC

China will not allow the U.S. to interfere in its legislative process and economic policies, but it seems to be showing a readiness to keep its sales in American markets on a steep and steady downward path.

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According to data released June 6 by the U.S. Department of Commerce, Chinese goods exports to the U.S. in the first four months of this year declined 12.8% from the same period of 2018, driving the trade surplus down 10%.

Although Chinese data released Monday morning point to a widening Chinese surplus on U.S. trade in the course of May, that wasn’t directly comparable to U.S. figures because of differing methodologies. Regardless, the trend of more balanced trade will — and must — continue if Beijing wants to return to normal trade relations with Washington.

Indeed, the signal is clear that China has decided to operate a radical change in its U.S. trade. Taken at an annual rate, China’s trade surplus with the U.S. in the January-April interval would be 23.5% below China’s surplus for all of last year.

It is a great pity the U.S. and China missed a chance to initiate such a rebalancing trend of their bilateral trade accounts when the Trump administration took office in January 2017.

China’s leaders were warned during the U.S. presidential campaign in 2015 and 2016 that Donald Trump, if he became president, would not tolerate excessive and systematic Chinese trade surpluses on their U.S. trades. As the saying goes, China could read the writing on the wall.

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