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China publishes trade data, exports and imports for July 2019

Tonghai Port Area in Nantong, Jiangsu Province, China.

Xu Congjun | Visual Group China | Getty Images

China on Thursday released better-than-expected trade data despite growing economic pressure from high US tariffs.

The Asian economic giant said its US dollar-denominated exports increased 3.3 percent in July from a year earlier, while imports fell 5.6 percent in the same period. The country's overall trade surplus last month was $ 45.06 billion, according to customs data.

China's trade surplus with the United States was $ 27.97 billion in July, down from $ 29.92 billion the previous month, the data showed. From January to July, China's trade surplus with the United States reached $ 168.5 billion.

Economists polled by Reuters had forecast a 2 percent drop in Chinese exports over the past year and an 8.3 percent drop in imports over the same period last year. According to the Reuters poll, the country's overall trade surplus in July would be $ 40 billion.

In June, China's exports declined 1.3 percent year-on-year, while imports declined 7.3 percent over the same period, according to customs data. This month's trade surplus was 50.98 billion dollars, according to the data.

"Lower external demand and punitive tariffs will continue to dampen export growth, while falling commodity prices, a high base last year and declining intermediate demand may have import growth in July, "wrote in a note last week analysts Citi Research preview of China's latest trade data.

The Chinese economy – the second largest in the world – is growing at a slower pace in the context of a growing trade battle between Beijing and Washington, which began in the form of a tariff war, but which has recently been extended to technology and currency. Last month, China said its economy grew 6.2 percent in the second quarter from a year ago – the lowest rate in at least 27 years.

Beijing has eased its monetary policy and introduced tax measures such as tax cuts to boost economic activity. But the growth of the Asian economic giant could still slow if the administration of US President Donald Trump applied new higher rates next month.

Last week, Trump threatened to cut tariffs by 10 percent on $ 300 billion worth of Chinese goods as of September 1. According to Citi analysts, Chinese exports would be reduced by 2.7% and growth by 50 basis points. This is in addition to the economic damage already suffered by China after the United States imposed 25% tariffs on Chinese goods valued at $ 250 billion.

As a result of Trump's latest tariff threat, China has allowed its currency – the yuan – to weaken below a significant threshold of 7 per US dollar. This has led the United States to qualify China as a manipulator of the currency, which, according to analysts, marks a new escalation of tensions between the two countries.

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