Published: Mon, January 14, 2019
Economy | By

China's exports shrink most in two years, raising risks for global economy

China's exports shrink most in two years, raising risks for global economy

China's exports to the United States rose 11.3% past year, while imports from the U.S. only increased 0.7%.

On a global level, China's exports have grown by 9.9 percent a year ago, but the Asian country also marked a 15.8 percent growth in imports.

In December, exports and imports unexpectedly fell 4.4 percent and 7.6 percent respectively from a year earlier. Imports also saw a shock drop, falling 7.6 per cent in their biggest decline since July 2016.

The trade gap widened because China's exports to the US rose 11.3 percent past year while imports from the USA rose by a paltry 0.7 percent. Import growth also fell sharply in the face of cooling domestic demand.

China's trade surplus with the U.S. widened previous year, while the country's imports and exports fell in December as the trade war begins to bite in the world's second biggest economy. The levies targeted hundreds of billions of dollars worth of Chinese goods past year and forced Beijing to retaliate. China has retaliated with tariffs of its own. "We expect both to remain weak in the coming quarters", Capital Economics said in a note.

However, Beijing's export data had been surprisingly resilient to tariffs for much of 2018, possibly because companies ramped up shipments before broader and stiffer USA duties went into effect. China exports to the U.S. declined 3.5 per cent in December while its imports from the USA were down 35.8 per cent for the month.

"A potential downturn in the sector poses the real risk to China's external outlook even if China and the U.S. reach a resolution on their trade dispute". He added that cooperation with Belt and Road countries "has become new driving force of China's foreign trade development". If a deal is not reached by that time, Washington is set to raise tariffs on $200 billion (€176 billion) of Chinese goods from 10 to 25 percent. For all of 2018, soybean, the second largest imports from the USA, fell for the first time since 2011.

"China effectively tackled changes of the external environment past year, and the foreign trade maintained stable and positive growth, reaching a historic high in import and export volume", the customs spokesperson, Li Kuiwen, said on Monday.

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