BEIJING • China's massive export engine sputtered for the second year in a row in 2016, with shipments falling in the face of persistently weak global demand and officials voicing fears of a trade war with the United States that is clouding the outlook for 2017.
Exports fell 7.7 per cent in 2016 from a year earlier, while imports slid 5.5 per cent, leaving China with a trade surplus of US$509.96 billion (S$727.10 billion), official data showed yesterday.
For December, overseas shipments dropped 6.1 per cent from a year earlier, said the Customs Administration, while imports rose 3.1 per cent, leaving a US$40.8 billion trade surplus.
"External demand remains sluggish," said Mr Wen Bin, a researcher at China Minsheng Banking. "The outlook for exports this year doesn't look very promising," he added, citing slowing global trade amid rising protectionism and uncertainties in US trade policy.
The weakening yuan, which fell 6.5 per cent against the US dollar last year and depreciated 6 per cent against a basket of currencies, is cushioning the impact of tepid global demand but doing little to revive sales.
The world's largest exporter faces more challenges and uncertainties as Mr Donald Trump - who accused China of being a trade cheat through his presidential campaign - is due to take office on Jan 20.
The world's largest trading nation could be heavily exposed to US protectionist steps if Mr Trump follows through on campaign pledges to label it a currency manipulator on his first day in office.
Mr Trump may limit the growth of China's exports by imposing greater trade protectionist measures, the Customs agency said. "The trend of anti-globalisation is becoming increasingly evident, and China is the biggest victim of this trend," agency spokesman Huang Songping said, adding that it will be difficult for the country's foreign trade to improve in 2017.
While the export picture had been grim all of last year, with shipments rising only one month in 12, import trends had been more encouraging, pointing to an increase in domestic demand starting around mid-year as companies imported more raw materials from iron ore to copper to help feed a construction boom.
"Trade protectionism is on the rise but China is relying more on domestic demand," said Mr Wen of Minsheng Bank in Beijing.
Weak exports have forced China's policymakers to rely on higher government spending and massive lending to boost domestic demand this year, at the risk of adding to a huge pile of debt.
But worries are mounting that the red-hot property market may have peaked, meaning China may have less appetite this year for imports of commodities such as copper and steel for construction work.