China's exports and imports contracted in December 2018. This is likely to continue into 2019 due to falling foreign demand, including demand for Chinese-made electronic products.
Shrinking exports and imports in December - especially in the electronic sector
China's exports and imports shrank 4.4%YoY and 7.6%YoY in December 2018, respectively, which was considerably down from our already downbeat forecasts of +2.5%YoY and 0.0%YoY, respectively.
Exports fell for commodity energy goods like coal and crude oil. But there were also declines in some electronic related parts and goods and auto-related parts.
It was a similar story for imports, but with even greater reductions in electronic-related parts and goods.
Trade of electronics will continue to shrink
We believe that the fall in electronic imports and exports is related to the lack of demand for upgrading smartphones, and also the start of foreign companies avoiding using China-made electronic components.
With regard to the possible shunning of China-made electronics by foreign firms, China could rely more on domestic demand as external demand fades. But exports and imports of electronic parts and goods will still likely continue to shrink in 2019.
Weakening foreign demand affects China's exports
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