China’s overall December exports unexpectedly fell 4.4 percent from a year earlier, the biggest monthly drop in two years, the customs data showed on Monday.
Imports also unexpectedly contracted in December — falling 7.6 percent, marking the biggest decline since July 2016.
That left the country with a trade surplus of $57.06 billion for the month, compared with analysts’ expectations for a surplus of $51.53 billion, up from $44.71 billion in November.
Analysts polled by Reuters had expected December shipments from the world’s largest exporter to have risen 3.0 percent, slowing from 5.4 percent in November.
Import growth had been expected to pick up slightly to 5.0 percent, after cooling to 3.0 percent in the previous month.
Exports fell due to softening global growth and as the drag from U.S. tariffs intensified, while imports also fell due to cooling domestic demand, said Julian Evans-Pritchard, senior China economist at Capital Economics.
China’s December trade surplus with the U.S. fell to $29.87 billion from $35.54 billion in November.
Beyond the tariffs battle with the U.S., China’s economy has been facing its own domestic headwinds. Even before Trump kicked off the latest escalation in trade tensions, Beijing was already trying to manage a slowdown in its economy after decades of breakneck growth.
Both sides have been trying to negotiate a deal, with the latest round of talks between Chinese and U.S. officials concluding last Wednesday.
China’s Commerce Ministry said last Thursday that the talks were extensive and established a foundation for the resolution of each others’ concerns.
The overall outlook is hardly rosy, said Evans-Pritchard.
“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,” he wrote in a note on Monday.
“Meanwhile, with policy easing unlikely to put a floor beneath domestic economic activity until the second half of this year, import growth is likely to remain subdued,” Evans-Pritchard added.
—Reuters contributed to this report.
Clarification: This article has been updated to clarify that China’s overall trade surplus for 2018 was $351.76 billion.
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