China’s exports slump for second year in a row, trade set to be further hit this year
Government warns that sales of Chinese goods and services overseas could be further affected this year amid signs of increasing trade protectionism
China’s exports measured in US dollars fell again in 2016 amid a global economic slowdown, marking a rare two-year drop in Chinese shipments overseas and pointing to a gloomy 2017 amid globally political uncertainties.
Chinese trade officials warned that the country’s US$2 trillion export machine might continue to lose steam as China’s trade partners, notably the US under President Donald Trump, might become more hostile to Chinese products.
China’s exports in 2016 fell 7.7 per cent compared with 2015 in dollar terms, deepening from a 2.8 per cent fall the previous year, despite a weaker yuan that in theory should help Chinese exports, China customs data showed on Friday. Imports fell 5.5 per cent last year.
Exports fell 6.1 per cent in December from the same period the previous year in dollar terms, underperforming a fall of 4 per cent predicted by economists and set against the drop of 1.6 per cent in November.
Imports grew 3.1 per cent last month, in line with market expectations, but lower than the rise of four per cent in November.
The worse may yet to come for China’s exporters as Trump is threatening to impose punitive duties on Chinese products.
“Trump’s trade policy might lead to very large negative impacts on China,” Zhu Haibin, chief China economist with JP Morgan, said at a briefing on Friday in Beijing.
The so-called “black swan” events, including British people’s decision to leave the European Union and the Trump presidency, would continue to dog the Chinese economy this year, Zhu said.
The US was China’s second-largest trade partner and its biggest export market in 2016.
China’s trade surplus reached US$40.8 billion in December, narrowing from the surplus of US$44.6 billion the previous month. Nearly half of the trade surplus came from trade against the US.
“The slowdown [in exports] is disappointing given signs from recent business surveys, and from Korea and Taiwan’s export data, that global demand continued to strengthen in December,” Julian Evans-Pritchard, a China economist at Capital Economics, said.
“A strong end to the year for global manufacturing failed to prevent a decline in Chinese trade growth last month,” the economist said in a research note.
“Looking ahead, it’s hard to see conditions becoming much more favourable to Chinese trade than they already are.”
Huang Songping, a spokesman at the General Administration of Customs, said at a press briefing that China would continue to see trade woes this year amid a complex global situation and economic downward pressures at home.
“The global political pattern will see huge changes this year, such as the Brexit departure from the European Union, elections in major European countries, the new presidency in the United States and the election of South Korea’s president. [These] will all bring changes to current policies and may exacerbate the momentum of trade protectionism globally,” Huang said.
The government will closely watch for trade policies after Trump takes office, he added.
With increasing likelihood of a worsening trade spat between the US and China, China’s exports of metal and chemical products and home appliances may be affected, according to a research note by China Merchants Securities.