- The value of Chinese imports and exports fell by the most since 2016 in the 12 months to December.
- The declines reflect the reversal of a front-loading in orders before higher import tariffs were introduced in China and the US earlier in the year.
- China’s trade surplus with the United States hit the highest level on record in 2018.
- Including trade with all countries, China’s trade surplus with the world fell to the lowest level since 2013.
The value of Chinese imports and exports fell heavily in the year to December, adding to a lengthening list of evidence that all was not well in the world’s second-largest economy at the end of 2018.
According to China’s General Administration of Customs, the value of exports tumbled 7.6% from a year earlier in US dollar terms, coming in well below the median economist forecast offered to Reuters for an increase of 5%.
Exports also undershot expectations by some margin, sliding by 4.4% in US dollar terms from December 2017, missing forecasts for an increase of 3%.
The year-on-year drop in imports and exports was the largest since the second half of 2016, largely reflecting the reversal of front-loading of trade orders before increased trade tariffs were introduced by both the US and China earlier in the year.
The monthly trade surplus swelled to $US57.06 billion, the largest since December 2015. Markets were looking for the surplus to increase to $US51.5 billion after lifting to $US44.71 billion in November.
Of note, China’s monthly trade surplus with the United States fell to $US29.87 billion, below the $US35.54 billion level of November. However, over the entirety of the year, it swelled by 17.2% to $US323.32 billion, the highest level on record.
Imports from the United States grew by 0.7% over the year, far outpaced by a 11.3% increase in the value of exports going in the other direction.
Combined, and despite the escalating trade war between the two economic superpowers, total bilateral trade rose by 5.7% compared to the levels seen in 2017.
Compared to 2017, China’s trade surplus with the world, including the United States, fell to $US351.76 billion, the smallest since 2013. Over that period, the value of imports rose by 15.8% in US dollar-denominated terms, faster than the 9.9% lift in exports.
Financial markets have not responded well to the detail of the trade report, particularly the year-on-year falls in imports and exports, with stocks, most commodities and China-proxy plays such as the Australian dollar coming under renewed selling pressure.
“Sorry, no front-loading in this data to hang one’s hat on!,” said Stephen Innes, Head of Asia-Pacific Trading at OANDA.