Bolton: US Sees China as 'Major Issue' of Century

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The world's two biggest economies last slapped tit-for-tat tariffs on each other's goods on September 24.

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

Trump renewed his charge that past presidents Obama and George W. Bush "let China get out of control" through the massive U.S. imports of manufactured goods.

Chinese exports to the United States also rose by 14 percent while Chinese imports from America dropped 1.2 percent.

Last month, Fitch Ratings cut its GDP growth forecast for China by 0.2 per cent to 6.1 per cent next year and cut its global forecast by 0.1 per cent in 2019, saying that the ratings agency does not "expect further policy easing to fully offset the drag from new U.S. tariffs" on the Chinese economy. Imports of American goods increased 9 percent to $12.6 billion, down from August's 11.1 percent growth.

USA nuclear exports to China amounted to $170 million in 2017, the officials said.

"It's obvious that the immediate effects of the trade war are the exact opposite of what the Trump administration had been planning", said Andrew Polk of Trivium China, a Beijing-based economics research firm.

China-U.S. relations have also been roiled by Beijing's heated objections to U.S. support for Taiwan, the self-governing island democracy it claims as its own territory, as well as China's claim to virtually the entire South China Sea, where the U.S. says a Chinese destroyer came aggressively close to a U.S. Navy ship late last month, forcing it to maneuver to prevent a collision.

"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.

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The measures are the latest salvo in a widening USA drive to pressure China, with the Trump administration recently slapping $250 billion in tariffs.

Mnuchin met Thursday with Yi Gang, head of China's central bank.

"It's got to be more than a signal" from China, Mnuchin said. That's significantly higher than the $196 billion recorded between January and September past year. These would be the first direct talks since August, but with both sides digging in their heels, there are few hopes the leaders can secure a major breakthrough.

S&P expects China's gross domestic product to grow at a 6.5 per cent rate this year, 6.3 per cent next year and 6.1 per cent in 2020.

The government is also concerned about diversion for use of technology by other countries, one of the officials said.

The International Monetary Fund this week cited the trade war as it lowered its 2019 growth forecast for China, which is set to see its slowest expansion since 1990.

New export orders in September declined at their fastest pace since February 2016, according to the Caixin China General Manufacturing Purchasing Managers Index.

"He won't be happy with these figures but it proves that tariffs don't help curb exports", Huo said.

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