Title: US-China trade war is brewing as trade deficit sticks at $25 billion
Headings: US-China trade war is brewing as trade deficit sticks at $25 billion, asset manager warns
US-China trade war is brewing as trade deficit sticks at $25 billion, asset manager warns
Key Points
Limited action from US?
President Donald Trump interacts with Chinese President Xi Jinping at Mar-a-Lago state in Palm Beach, Florida, U.S., April 6, 2017.
Debt problems

Content: In July, exports from China grew 7.2 percent in dollar terms from a year ago and imports rose 11.0 percent in dollar terms. Both were much lower than expected. Despite weaker-than-estimated growth, China maintained its trade surplus with the U.S. of around $25 billion. This trade gap is closely watched due to growing tensions between the two countries. “Chinese trade data for July disappointed market consensus expectations. Both yearly export and import growth moderated in comparison with the previous month, against expectations for remaining just as strong,” said Susan Joho, economist at Julius Baer, in an email to CNBC. “Export growth to the U.S. almost halved amidst tensions over China’s large trade surplus with the U.S.”
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Debt problems
The reason for the relatively lackluster trade growth indicated that China is failing to switch the focus of its economy from manufacturing to consumption, according to McCaughan. “The reason growth is where it is in China has a lot to do with continued construction activity and that is not something that is long-term sustainable,” he said. “You run into debt problems very quickly if construction is what’s driving the economy.”