WASHINGTON (AFP) — The US trade deficit widened 1.2 percent in October to 57.8 billion dollars, driven by record high oil prices and surging imports from China, the government said Wednesday.
The monthly trade report, showing a nine percent rise in Chinese imports, came after the opening of tense bilateral trade discussions in China marked by mutual accusations of protectionism.
The US Commerce Department reported an October trade deficit slightly higher than analysts' consensus forecast of 57 billion dollars.
The September trade deficit was revised upward to 57.1 billion dollars from a previously estimated 56.5 billion dollars.
Imports increased 1.0 percent to 199.5 billion dollars and exports 0.9 percent to 141.7 billion dollars, both record levels, the department said.
The October trade balance highlighted two key factors pressuring the US economy: dependence on foreign oil and Chinese imports.
While the depreciating dollar has been supportive of US exports, the currency's weakness has had negligible power to cushion the impact of higher oil prices, which are denominated in dollars, and imports from China, where the yuan currency is pegged to the dollar.
Critics in the United States accuse China of keeping the yuan artificially undervalued, making Chinese products cheaper abroad and giving Chinese exporters an unfair advantage.
High oil prices were the main cause of the widening gap in October. Imported oil values climbed to a record 72.49 dollars a barrel, pushing the oil trade deficit to an all-time high of 26.3 billion dollars.
The deficit in other goods, meanwhile, fell to 38.5 billion dollars, its lowest level since March 2004.
Exports in October were largely lifted by commercial aircraft sales of 913 million dollars.
The trade gap with China soared 9.1 percent to 25.9 billion dollars, representing one third of the total US deficit. Imports from China hit an unprecedented 31.6 billion dollars.
The report came after the close of the first day of contentious US-China trade discussions on the outskirts of Beijing.
In her opening remarks to the third Sino-US Strategic Economic Dialogue, the head of China's delegation, Vice Premier Wu Yi, told the United States bluntly to fix its own problems rather than complain about China.
"Obviously, to resort to trade protectionism and blame another country for the structural problems in the US economy is the wrong approach which would only harm the interest of the United States itself," Wu said.
With Japan, the US trade deficit jumped 28.6 percent to eight billion dollars, while the gap with Canada climbed a more moderate 6.2 percent to 5.2 billion dollars.
The gap nearly doubled with the 27-country European Union, to 11.9 billion dollars, because of a record level of imports led by strong gains from Italy and France.
The outlook darkened for the trade balance in November, when oil prices reached record peaks above 90 dollars a barrel.
In a separate report, the Labor Department said its import price index rose 2.7 percent in November, the largest monthly advance since October 1990. The increase was led by a 9.8 percent rise in petroleum prices, after a 5.1 percent gain in October, the department said.
The increase in the trade gap reinforced expectations of a sharp slowdown in the world's biggest economy as tight credit and a deepening housing slump bite, following a robust 4.9 percent rise in third-quarter gross domestic product (GDP).
"The stubbornly large trade deficit heightens the risk of recession. The deficit subtracts about 250 billion dollars from GDP, and that amount could double if the economy slips into recession," said Peter Morici, an economist at the University of Maryland.
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