China December Exports Fall Most Since 2016

China’s exports and imports in December declined at the worst rates in two years, adding to evidence of a rapid slowdown in the economy amid the trade war with the US and weakening global activity.

Exports dropped 4.4 percent year-on-year in December, figures from the General Administration of Customs showed on Monday. That was in contrast to the 3 percent gain economists had predicted.

Imports decreased 7.6 percent from a year ago, defying expectations for a 5 percent rise.

Both exports and imports outcome was the worst since 2016. In December, the trade surplus was $57.1 billion.

“This [decline in exports & imports] is likely to continue into 2019 due to falling foreign demand, including demand for Chinese-made electronic products,” ING economist Iris Pang said.

For 2018 as whole, exports grew 9.9 percent imports rose 15.8 percent, resulting in a trade surplus of $351.8 billion, which was over 30 percent lower than a year ago.

The trade with the US yielded a surplus of $323.3 billion, which according to Reuters was the highest on records dating back to 2006.

The record trade surplus is likely to prompt the US to put more pressure on China to change its trade practices.

Exports to the US rose 11 percent in 2018, while imports were unchanged.

Early January, the Chinese and US officials held talks to diffuse the trade tensions. Talks were aimed at persuading the US to cancel its plan to raise tariffs on imports from March 2.

Reports suggested that the talks went well, but details are yet to emerge.

“The US will likely experience a slowdown later in the year due to a combination of weakening fiscal stimulus and higher prices of inputs stemming from tariffs,” ING’s Pang said.

“Major European countries are also struggling to maintain growth and combined with a weaker US, provides a challenging external demand backdrop for China’s exports in 2019,” the economist added.

China’s government is reportedly planning to set a growth target of 6-6.5 percent for this year, which is lower than the about 6.5 percent aimed for 2018.

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