The Chinese yuan is strengthening against most major currency rivals on Thursday after the federal government reported better-than-expected trade numbers.
China recorded a trade surplus of $45.06bn last month, down from $50.98bn in June.
As trade tensions continue to rise between the United States and China, White House economic adviser Larry Kudlow thinks the US has the upper hand in negotiations based comparing the world's two largest economies.
The US has vowed to impose duties on $300 billion worth of Chinese products on September 1, after long-running trade negotiations between the two countries broke down. In response, China on Monday said it would stop purchasing U.S. agricultural products. Still, the drop was less than an expected 8.3 percent and June's 7.3 percent.
The surplus with the United States was little changed but stood at $28 billion, a level that might fuel American pressure for Chinese concessions in trade talks.
But imports remained weak, declining 5.6 per cent and highlighting sluggish domestic demand as China's economy struggles to get back on firmer footing.
Both the onshore and offshore yuan breached the 7.0 level against the USA dollar on Monday, which investors see as a key threshold in the Chinese currency's value, but foreign exchange trading yesterday was calmer, with the onshore yuan weakening 0.08 percent to 7.0512, and the offshore currency strengthening 0.24 percent to 7.0802.
Trade has weakened since Trump started hiking tariffs on Chinese goods last June.
Trump has repeatedly expressed dissatisfaction with the dollar's rise, backed by a recovery in the US economy. But the figure for the first seven months of this year was up by around 4 percent, indicating a continuing imbalance.
Fears rose in global financial markets and sparked greater vulnerability since the previous week, as the U.S. made a decision to impose tariffs on another $300bn of Chinese goods starting on 1 September.
While the US Department of the Treasury's determination is largely symbolic, as the potential punishments are a shadow of the steps Trump has already taken against China, it underscores the rapidly deteriorating relationship between the world's two largest economies.
While American exporters have been hit hardest, Chinese industries, including electronics, that Beijing sees as its economic future have suffered double-digit declines in sales to the United States, their biggest market.
Investors feared the label would eliminate China's incentive to slash the value of the yuan versus the dollar, setting off a currency war with the United States. "China was killing us with unfair trade deals", he said.
On 6 August the onshore rate of the yuan reached 7.0699 per dollar in intraday trading, a 0.49 per cent drop, before closing at 7.0321 per dollar. That leads other nations to hold the reserve currency to purchase such goods and to maintain a steady exchange rate.
The company, in Wuhan, Hubei province, said it aims to export 77,500 vehicles this year, covering a wide range of markets including South America, Africa, Southeast Asia and the Middle East.
Trade weakness has added to pressure on Xi's government to shore up economic growth and avoid politically unsafe job losses.