China December exports unexpectedly drop

Analysts said that with global growth set to cool further this year, exports will remain weak even if China can clinch a trade deal that rows back Trump's tariffs.

The dismal December trade readings suggest China's economy may have lost more momentum late in the year than earlier thought, despite a slew of growth boosting measures in recent months ranging from higher infrastructure spending to tax cuts.

Exports in December unexpectedly fell 4.4 per cent from a year earlier, with demand in most of its major markets weakening.

For the month, imports also unexpectedly contracted, falling 7.6 percent, the biggest decline since July 2016.

"Export growth dropped more than anticipated as global growth softened and the drag from USA tariffs intensified".

The OECD said its composite leading indicators, gauges of economic activity that are created to anticipate turning points relative to past performance for between six to nine months ahead, also showed easing growth momentum in the US, Germany, Canada, Italy and the euro area as a whole. For all of 2018, soybeans, the second largest imports from the U.S., fell for the first time since 2011.

Customs data showed that Chinese exports rose 11.3 percent in 2018 to $478.4 billion, while imports from the USA only rose by 0.7 percent.

In 2017, the trade difference between the two world's largest economies was $275.8 billion in China's favor.

Fears are growing over the state of the global economy after China recorded a shock plunge in exports, while European factory output slumped by the biggest margin in nearly three years.

Washington imposed import tariffs on hundreds of billions of dollars of Chinese goods a year ago and has threatened further action if Beijing does not change its practices on issues ranging from industrial subsidies to intellectual property.

But the buying fell off a year ago after China imposed a 25 percent retaliatory tariff on the commodity in the summer.

"Today's data reflect an end to export front-loading and the start of payback effects, while the global slowdown could also weigh on China's exports", Nomura economists wrote in a note, referring to a surge in shipments to the USA over much of a year ago as companies rushed to beat further tariffs. Imports rose 12.9 percent to $2.1 trillion, down from the previous year's 15.9 percent.

But December's gloomy data, along with several months of falling factory orders, suggest a further weakening in its exports in the near term.

Analysts polled by Reuters had expected December shipments from the world's largest exporter to have risen 3 percent, slowing from 5.4 percent in November.

The higher tariffs China levied on U.S. supplies also hit overall import growth.