BEIJING: China’s trade surplus with the United States hit a record high last year but the country’s imports and exports fell in December as the long-running trade war begins to bite in the world’s number two economy, data showed on Monday.

The surplus with the US is a major source of anger within the Trump administration, which imposed tariffs on hundreds of billions of dollars worth of Chinese goods last year and has warned of more to come.

Despite the levies, exports to the United States grew 11.3 per cent last year while imports rose 0.7pc, expanding the surplus to a record $323.3bn from $275.8bn in 2017, customs data show.

However, in a sign that the White House’s measures are having an impact, China’s exports to the US sank last month.

The figures come after a US delegation held three days of talks in Beijing last week in the first face-to-face meeting since Donald Trump and Chinese leader Xi Jinping in December pledged a 90-day truce to resolve the crisis.

Trump wants Beijing to buy more American goods to narrow the yawning trade gap and allow foreign players better access and protection in the Chinese market.

China traditionally imports vast quantities of American soyabeans in the second half of the year, long making it the most valuable import from the US.

Subdued import growth

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

Total imports of soyabeans fell 7.9pc last year to 88 million tonnes, customs data showed, with December imports down 40.1pc from a year earlier.

“The overall development of China-US trade in 2018 was still relatively normal, but the trade surplus did expand slightly,” said Li Kuiwen, spokesman for the customs administration.

The country’s commerce minister told state media on Friday that China will work to straighten out trade frictions with the US this year.

China’s exports to the world fell 4.4pc in December from a year earlier, while imports dropped 7.6pc, reflecting sluggish demand at home and abroad.

“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,” said Julian Evans-Pritchard of Capital Economics.

The trade slowdown sent Chinese stocks lower on Monday.

Rapidly falling exports could point to rising unemployment, said Nomura economist Lu Ting.

“Beijing will perhaps be more eager to strike a trade deal with the US...policymakers will need to take more aggressive measures to stabilise GDP growth,” Lu wrote in a note.

‘Hidden concerns’

China’s global trade volume rose last year but its surplus with the world fell 16.2pc to $351.76bn in 2018, as imports rose 15.8pc while exports gained 9.9pc.

The customs administration will work to “improve the country’s business environment and expand foreign trade... in order to keep employment, the financial sector, foreign trade, foreign investment” stable, Li said, adding there are some “hidden concerns” and “uncertain external factors” for development.

With US tariffs in place, the gloomy export picture has reinforced the need for Beijing to rely on its legion of consumers to grow its economy.

But a slew of bad data has added to concerns about China’s economy, which is expected to have grown around 6.5pc in 2018, down from 6.9pc in 2017 and at its weakest rate in almost three decades.

China’s annual passenger car sales fell last year for the first time in more than 20 years, as the trade war with the US rocked consumer confidence and Beijing reined in car financing channels.

Published in Dawn, January 15th, 2019