China’s exports shrink most in 2 years, raising risks to global economy
BEIJING (Reuters) – China’s exports unexpectedly fell the most in two years in December, while imports also contracted, pointing to further weakness in the world’s second-largest economy in 2019 and deteriorating global demand.
Adding to policymakers’ worries, data on Monday also showed China posted its biggest trade surplus with the United States on record in 2018, which could prompt President Donald Trump to turn up the heat on Beijing in their bitter trade dispute.
The dismal December trade readings suggest China’s economy may have cooled faster than expected late in the year, despite a slew of growth-boosting measures in recent months ranging from higher infrastructure spending to tax cuts.
China’s December exports unexpectedly fell 4.4 percent from a year earlier, with demand in most of its major markets weakening. Imports also saw a shock drop, falling 7.6 percent in their biggest decline since July 2016.
“The export growth print also suggests that the recent strength of the yuan might be short-lived; Beijing will perhaps be more eager to strike a trade deal with the U.S.; and that policymakers will need to take more aggressive measures to stabilize GDP growth.”
Asian shares and U.S. stock market futures fell as the surprisingly weak Chinese data added to fears of weaker corporate profits and investment, while the yuan currency gave up some of its early gains.[MKTS/GLOB]
China’s politically-sensitive surplus with the U.S. widened by 17.2 percent to $323.32 billion last year, the highest on record going back to 2006, according to Reuters calculations based on customs data.
As many market watchers predicted, that boost has faded in the last few months. China exports to the U.S. declined 3.5 percent in December while its imports from the U.S. were down 35.8 percent for the month.
China’s total global exports rose 9.9 percent in 2018, its strongest performance in seven years, while imports increased 15.8 percent.
But December’s gloomy data, along with several months of falling factory orders, suggest a further weakening in its exports in the near term.