China’s exports grew at the slowest pace in three years in 2019 as the world’s second largest economy felt the fallout from its trade war with the US.
In a negative data point for container shipping, exports from China climbed by 0.5% last year, down sharply from 2018’s expansion of nearly 10%, according to Chinese customs data.
In December China’s export growth in US dollar terms rose 7.6% year-on-year, while import growth jumped 16.3% both surprising markets to the upside.
The big rise in year-over-year export growth in December was mainly due to three factors, said Japanese investment bank Nomura.
These included a low base in December 2018 as a result of front-loading; the recent de-escalation of the US-China trade war; and a moderate recovery of the global economy.
“The surge in import growth was also driven by a variety of factors including rising oil prices in year-on-year terms, a rise in processing imports, possibly driven by a better prospect for exports, and a surge in raw material imports,” Nomura said.
“The timing of Chinese New Year holiday, which occurs in January this year but was held in February 2019, may have also pushed exporters and importers to clear customs in December ahead of the incoming holidays.”
Nomura said it expects “volatile monthly readings” of trade growth over the next couple of months, due to distortions from the Chinese New Year holiday.
“We do not think the high export and import growth levels in December are sustainable and expect trade growth to drop again in subsequent months,” the bank said.
By destination, the growth rate for exports to the EU jumped to 6.6% year-on-year in December from a 3.8% slump in November. For exports to Japan, a 3.4% decline marked an improvement from a 7.9% drop previously.
Growth in exports to ASEAN also rose to 27.4% year-on-year in December, from a 16.7% growth in November.
Growth in exports to the US remained sluggish with a 14.6% slump last month compared to the prior year, though that's an improvement on November.
“The sluggish growth of exports to the US suggests the adverse impact from the increased US tariffs remains significant,” Nomura said.
By contrast, growth of imports from the US rose to 7.8% year-on-year in December from 2.7% in November, due to more agricultural imports from the US amid trade negotiations.
China’s trade surplus with the US narrowed to $23.2bn in December from $24.6bn in November, taking the 2019 full-year trade surplus with the US to $295.8bn from $323.3bn in 2018.
News of the weaker annual export growth comes as the two countries prepare to sign a “phase one” trade deal in Washington later Wednesday.
