China’s Trade Surplus For May Hit $41.65 Billion – Trump Threatens Xi To Meet Him At G20 Summit … Or Else

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Jun 11 2019
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China just revealed that its overall trade surplus registered US$41.65 billion last month (May 2019) – despite ongoing trade war with the U.S. That’s a mind-boggling number as economists polled by Reuters had expected the country to post an overall trade surplus of only US$20.5 billion. Instead of forecast that both exports and imports would fall 3.8% year-on-year in May, it actually increased 1.1%.


At the same time, China’s trade surplus with the United States increased to US$26.89 billion in May from US$21.01 billion in April. Two factors contributed to the larger than expected trade surplus – increase in export and decrease in import. It seems the Middle Kingdom knew which button to press to ensure continuous trade surplus under the present conflict with the U.S.


While many analysts and economists expect China to experience a larger economic hit from its ongoing trade war, the country stubbornly refuses to go down without a serious fight. Sure, data in recent months have shown signs of slowing activity in China. But the U.S. is being hit equally bad when its latest employment data showed weaker than expected job creation.

US-China Trade War - Clashes

The U.S. Labour Department unveiled that in May, jobs increased by just 75,000, when economists surveyed by Dow Jones had expected a gain of 180,000. It’s hard to argue that the horrible job count was not related to the current US-China trade dispute. The report means economic activity is slowing and a recession is possible within the next year.


Interestingly, as China’s total exports in May surprisingly jumped 1.1% and imports dropped by 8.5%, resulting in US$41.65 billion surplus, the exports of rare earths fell last month. As speculation ran wild that Beijing might weaponise the rare earths, data released by Chinese customs showed that China exported 3,639.5 metric tons of rare earths in May – down from 4,329 metric tons in April.


More importantly, the May trade surplus recorded by China means that even without the US$26.89 billion surplus gained from the U.S., the country still enjoyed a surplus of US$14.76 billion from elsewhere. In essence, Trump administration cannot trumpet that China suffers from a prolonging trade war while the Americans are immune from any damage.

President Xi Jinping and President Donald Trump - Osaka Japan G20 Summit 2019

But the most stunning drama came from Washington when President Donald Trump threatened to immediately slap tariffs on another US$300 billion of Chinese goods – if President Xi Jinping chooses to skip the G-20 summit, which is scheduled for June 28-29 in Osaka, Japan. Trump is supposed to meet with Xi there, where the leaders of 19 nations and the European Union are expected to attend.


Repeating his old mantra that he has “a great relationship” with Xi, and that “the Chinese president is actually an incredible guy”, Trump said he would be surprised if Xi did not attend the summit in Osaka. However, at the same time, U.S. Treasury Secretary Steven Mnuchin said his boss is perfectly happy to hit China with the tariffs if Xi-Trump meeting doesn’t go well.


So, will it make any difference if President Xi attends the G-20 summit or not, considering the previous negotiations between U.S. and China had gone so bad that both parties have effectively stopped talking to each other? Exactly how could Trump and Xi emerge happily from a face-to-face meeting at G-20 when Trump happily mixes trade surplus with national security – the blacklisting of Huawei?

US-China Trade War - Chess - Cartoon

And since Trump knew there would be no positive outcome from a meeting with Xi in Osaka, why did he insist that the Chinese president must be there? Does Trump plan to humiliate Xi before slapping a new tariff anyway? Does the U.S. president believe he could repeat the same humiliation the foreign powers did to China just like the First Opium War (1839 – 1842)?


There were naughty talks that not only the U.S. wants to change the China law and political structure, but also to leverage on the trade war to effect a regime change – overthrowing of Xi Jinping. Perhaps that explains why Trump kept tightening the screws on Xi, hoping that the Chinese president will cave in and kowtow to the West.


So far, Xi Jinping has neither agreed nor disagreed to meet with Donald Trump. President Xi only declared that the U.S. president has been just his “friend”, but told all and sundry that the Russian President Vladimir Putin was his “best friend“. Perhaps Trump hopes Xi would be as excited as him based on their previous 2018 G20 Buenos Aires summit last November.

Huawei CFO Sabrina Wanzhou Meng

The Group of 20 summit in Argentina last November between both leaders saw Washington postpone a tariff hike while the two nations resumed negotiations. But on Dec 1 last year, the same night that Donald Trump and Xi Jinping dined together in Buenos Aires and agreed to a 90-day trade truce, Sabrina Meng Wanzhou (Huawei’s CFO), was arrested in Canada at the request of the U.S.


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