“But tariffs can’t take all of the blame – exports to the rest of the world also slowed, with surveys pointing to weaker global demand at the end of 2018.”
Soft global demand
Australian shares ended Monday’s session slightly lower on the data, while the Australian and New Zealand currencies fell. China’s main stockmarket, the Shanghai Composite, was trading 0.6 per cent weaker in afternoon trade.
Economists said China’s exports would remain weak this year even if it can ward off further tariffs and negotiate a trade deal with Washington by a March 1 deadline. Slowing demand from Chinese consumers for products such as iPhones and foreign cars has already showed up in profit warnings from companies such as Apple.
The data also points to soft global demand for China’s goods as well as slowing domestic consumption. China releases fourth-quarter GDP data next week.
“The global electronics cycle remains the key driver of Chinese exports,” said Raymond Yeung, ANZ’s chief economist for Greater China. “A potential downturn in the sector poses the real risk to China’s external outlook even if China and the US reach a resolution on their trade dispute.”
Despite the weak data for December, China’s trade figures for 2018 as a whole remained robust although growth was not as high as in previous years. China reported a 15.8 per cent rise in imports and a 9.9 per cent increase in exports in US dollar-denominated terms for the year. China’s overall trade surplus for 2018 was $US351.8 billion ($487.9 billion).
China’s trade surplus with the US rose 17 per cent to $US323.3 billion, the highest on record.
Trade is expected to fall sharply in 2019 although this depends on efforts by Washington and Beijing to negotiate a truce in their trade war.
Li Kuiwen, spokesman for China’s General Administration of Customs, told journalists foreign trade growth would slow down in 2019 due to the “complicated and severe” external environment but also noticed it was coming off a high base.
One of biggest victims
China’s official economic growth is expected to slow below 6 per cent next year. It will release annual GDP data next week which is expected to fall within the central government’s target of 6.5 per cent.
Crude steel imports rose 10.1 per cent to 462 million tonnes. But iron ore imports for the year fell by 1 per cent to 1.06 billion tonnes in 2018. Xu Xiangchun, an analyst with iron and steel industry consultancy Mysteel.com, said the increased use of scrap steel in China was driving production. He expected iron ore imports would be flat in 2018.
China’s steel demand will drop 2.4 per cent to 800 million tonnes, government consultancy the China Metallurgical Industry Planning and Research Institute said last month. China’s steel demand increased by 12.6 per cent in 2018 to 820 million tonnes, it said.
China’s exports to Australia increased by 14.2 per cent in 2018, while imports from Australia rose 11 per cent. China’s exports to the US rose 11.3 per cent but China’s imports from the US only rose 0.7 per cent. China’s imports from Russia jumped 42.7 per cent.
Soybean imports, one of the biggest victims of the trade war, fell by 7.9 per cent to 88 million tonnes during the year. LNG imports increased by 31.9 per cent for the year to a record 90.4 million tonnes.
China’s Vice-Premier Liu He is expected to visit Washington at the end of January for the next round of trade talks. There has been growing optimism both powers can reach a deal following positive comments from Mr Trump after last week’s mid-level talks in Beijing, although the outcome remains unpredictable.
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