China's trade surplus with the U.S. rose to a record in August even as U.S. tariffs targeting $50 billion of Chinese exports were in effect for their first full month.
Exports to the U.S. in August grew 13.2% year over year from 11.2% in July, China's Customs data showed. Imports from the U.S grew an annual 2.7%, slower from 11.1% in July.
As a result, China's trade gap with the U.S. rose to $31.05 billion in August from $28.09 billion in July. Over the first eight months of the year, China's surplus with the U.S. has risen nearly 15%, adding to tensions in the trade ties between the world's two largest economies.
China's overall annual export growth in August moderated slightly to 9.8%, the weakest rate since March. Imports climbed 20%, beating forecasts, a sign that domestic demand is holding up China's economy for now.
That yielded a smaller overall trade surplus of $27.91 billion in August, government data showed.
In the event of an all-out trade war, China could be hit harder by a change in market sentiment than a direct impact from tariffs, former People's Bank of China Governor Zhou Xiaochuan said in an interview with Bloomberg Television.
"People may become nervous. Nobody really knows. Suddenly there is a trade war. They may change their mind in terms of stock market investment."
Zhou previously said that China should defend against the risk of a sudden collapse of asset values. China's currency has weakened more than 6% since mid-June, the worst performer in Asia, while stocks have entered a bear market.
Zhou said Sept. 7 that close vigilance is needed and China's top priority must be avoiding an asset bubble. "We should keep the currency floating with the market demand and supply relationship to avoid any kind of distortion," he told Bloomberg.