US trade deficit with China hits record high

Americans bought record amounts of goods from China in September, pushing the trade gap between the world’s largest economies to a historic high, according to U.S. Commerce Department data published Tuesday.

September imports from the Asian giant hit $44.9 billion, up nearly 13% on the month, as the U.S. economy gained steam.

The import and trade gap numbers—unadjusted for inflation and exchange rates–are the largest since Commerce started collecting trade data with China in the early 1970s.

Most of the $5 billion increase in imports was fueled by a $3 billion surge in buying of cell phones. In September, Apple released the iPhone 6 and 6 Plus, both of which are assembled in China.

Exports to China fell 3% on the month to $9.3 billion as China’s economy showed more signs of slowing.

At $35.6 billion, the trade gap with China represents more than 80% of the total U.S. trade deficit of $43.0 billion.

US trade with China

Source: U.S. Commerce Department

The data’s likely to revive U.S. lawmaker calls to penalize Beijing for keeping a lid on the value of its currency. U.S. manufacturers complain the policy gives Chinese companies an unfair advantage, especially as the value of the dollar appreciates.

Although the U.S. Treasury Department has praised China’s gradual appreciation of the yuan in recent years, it said last month that the currency still remains “significantly undervalued.”  Beijing’s currency intervention in the last year raised questions about the government’s commitment to move toward a fully market-determined exchange rate.

China’s growth rate is falling amid a weaker global outlook and as some of its economic overhauls weigh on output. Beijing has appreciated the yuan nearly 15% since 2010, accounting for inflation, but restarted exchange rate interventions late last year amid slowing growth prospects.

In April, the administration criticized China’s yuan depreciation as an “unprecedented” currency intervention, renewing long-running exchange-rate frictions. But after high-level talks in Beijing over the summer, Treasury officials said Chinese officials committed to reducing currency intervention.

September’s figures likely represent a combination of the strengthening dollar, which allows Americans to buy more international goods with the same amount, stronger U.S. demand as the recovery gains traction, Beijing’s yuan policy and weakening Chinese consumption.

Chinese imports China