Bad news or a one-off reaction to signs of movement in the trade war with Donald Trump’s America?
We won’t know for several months, but China’s trade performance in December knocked markets across Asia on Monday.
December saw a sharp fall Chinese as slowing domestic demand and the impact of the trade war with the US hit the world’s second-largest economy.
The 4.4% drop came despite China’s annual trade surplus with the US hitting a record high, thanks to American importers front-loading imports of Chinese goods ahead of the initial January 1 deadline from Donald Trump to increase tariffs on $US200 billion worth of goods.
That heavy buying eased off after both sides agreed to a three-month truce in early December, and exports to the US shrank at a slower rate of 3.5% in the month.
Imports also shrank 7.6% in December (compared to expectations for a 5% rise. That was the biggest monthly fall since mid-2016.
The 4.4% slide in exports and the lower import bill (helped by lower commodity prices and a stronger yuan) produced a trade surplus of $US57 billion in December, the largest in three years.
China’s total global exports rose 9.9% in 2018, its strongest performance in seven years, while imports increased by 15.8%.
Trade figures this month and in February will be distorted as usual by the timing of the Lunar New Year (it’s on February 5). So the true state of China’s trade won’t be known until April-May.
Softening demand in China is being felt around the world – as we have seen with reports of slowing sales of iPhones to cars, which in turn have seen warnings from the likes of Apple, Ford and from Jaguar Land Rover – the later two announcing sweeping job cuts in the past week.
China’s annual trade surplus with the US rose to $323 billion for all of 2018, up more than 17% to the highest level on record. Exports and imports in the month of December fell sharply as the advanced shipments eased.