China’s export growth slowed to a three-year low last year as the effects of trade tensions with the US and a slowing global economy took their toll.
Exports grew 0.5 per cent in dollar terms in 2019, the lowest reading since 2016, when they contracted, and down from the 9.9 per cent growth a year earlier, according to China’s general administration of customs. Imports fell 2.8 per cent last year.
Trade tensions between Beijing and Washington rose last year with each side applying additional tariffs on the others’ goods, stoking fears that the dispute would push the global economy into a downturn.
In renminbi terms, trade with the US fell 10.7 per cent to Rmb3.73tn ($541bn). But Zou Zhiwu, vice-minister at China’s customs administration, said bilateral trade between the world’s two largest economies began to improve at the end of the year.
“Our US imports started to recover in November and December,” he said at a briefing on Tuesday, pointing to a 9.1 per cent year-on-year increase last month. Imports of US agricultural products doubled while vehicle imports increased 50 per cent, he said.
In December, the US and China agreed not to proceed with a planned round of tariff increases. Liu He, China’s vice-premier and top trade negotiator, flew to Washington on Monday to sign a “phase one” trade deal.
This week’s agreement, if concluded as scheduled on Wednesday, aimed to increase Chinese purchases of US commodities, manufactured goods and services by $200bn over the next two years, compared with 2017.
Donald Trump began imposing punitive tariffs in the summer of 2018, fuelling a two-year decline in bilateral trade and investment flows between the world’s largest economies. The escalations continued in September, with the Chinese government responding with tariffs of its own on US exports.
The US Chamber of Commerce estimates that increased Chinese purchases of US agriculture products will account for only about $32bn of the $200bn target, implying that Beijing will have to import huge amounts of energy, manufactured goods and services to make up the difference.
Tensions eased further on Monday as the US removed China from its currency manipulator list, reversing a decision made in August at a low ebb for relations between Washington and Beijing.
Figures released on Tuesday showed China’s December trade figures beat estimates. Exports grew 7.6 per cent year on year in dollar terms, bucking four months of falls and beating a Reuters forecast of more moderate 3.2 per cent growth. Imports jumped 16.3 per cent against an expected 9.6 per cent increase.
Washington agreed in December to not raise levies on $156bn of Chinese goods just days before the tariffs were set to be introduced and agreed to cut levies introduced in September.
Julian Evans-Pritchard, senior China economist with Capital Economics, cautioned that the data was less upbeat than it appeared as it was “more of a reflection of base and price effects than current strength” and that domestic demand remained subdued.
Mr Evans-Pritchard said any increase in imports from the US as part of a trade deal “will probably come at the expense of imports from elsewhere”.
He added: “A gradual recovery in GDP growth among China’s trading partners should help to put a floor beneath exports this year. The US-China trade deal due to be signed this week will also help at the margin.”
The figures come ahead of China fourth-quarter gross domestic product data set to be released on Friday. The world’s second-largest economy is expected to have grown by 6 per cent in the final three months of 2019.