China’s international trade activity dropped in December, Panjiva analysis of official data shows, with exports having fallen by 4.4% and imports by 7.6% in dollar terms and having risen by 0.2% and dropped by 3.1% respectively in yuan terms. The drop in exports is a particular concern given that was the first year-over-year decline in dollars since Dec. 2016.
Source: Panjiva
Perhaps unsurprisingly a major culprit was trade with the United States. Exports to the U.S. fell 3.7%, the first non-seasonal decline since Oct. 2016. That would indicate an end to the pre-tariff purchasing rush by U.S. buyers following an agreement between President Xi Jinping and President Donald Trump at the start of December to hold-fire on increases while trade negotiations take place. Exports to the U.S. had previously climbed by 12.3% in the prior three months.
The negotiations continue until March, yet it is still clear that the U.S is a net loser from the tariffs. The decline in Chinese imports from the U.S. accelerated to 35.8% on a year earlier from 10.3% in the prior three months. As a result Chinese imports from the U.S. fell $5.80 billion in December while exports fell $1.53 billion, a net balance of $4.28 billion “against” the U.S.
That shift may overshadow talks that, as outlined in Panjiva research of Jan. 9, are set to resume at the end of January.
Source: Panjiva
Yet, trade with the U.S. is not the only reason that Chinese exports fell. Shipments to Hong Kong were reported as having fallen by 26.0% – though that likely included volatile elements including gold – while exports to Taiwan dropped 1.7% and those to Japan by 1.0%. Those would suggest China’s economic problems are more widespread than simply the U.S. trade war.
Source: Panjiva