Chinese trade data delivered a pleasant, and largely unexpected, surprise in December.
In US dollar terms, exports fell by 1.4% from a year earlier, beating expectations for a contraction of 8.0%. It was the smallest annual decline recorded since June 2015, and a sharp improvement on the 6.8% contraction seen in November.
On the other side of the ledger, imports fell by 7.6% from 12 months earlier, again smaller than the 8.7% contraction of November and forecasts for an acceleration to 11.5%.
The improvement in both figures, particularly for exports, left the trade surplus at $60.09 billion, well above the $53 billion level expected.
In yuan-denominated terms, exports rose by 2.3% while imports slid 4.0%. Despite the recovery in December, over the year imports fell by 13.2% from 2014, overshadowing a smaller 1.8% contraction in exports.
A China Customs spokesperson stated that weak external demand was one of the main reasons for the poor export performance seen during the year, adding that these difficulties were likely to persist in 2016.
He also noted that the recent yuan depreciation will stimulate exports and dampen imports, although its impact would diminish over time.
While that will assist Chinese firms short-term, it does the exact opposite for those firms operating outside, and competing against, China.