China's exports contract at fastest pace in decade

Falling exports and Import growth to weigh on commodities

Last update: 1:21 a.m. EST Jan. 13, 2009

HONG KONG (MarketWatch) -- China's export growth contracted in December at its fastest pace in almost a decade, according to government data released Tuesday.

December shipments fell 2.8% to $111.16 billion from a year earlier, its biggest contraction since April 1999 and following a 2.2% narrowing in November, data released by the General Administration of Customs showed Tuesday. Imports were down 21.3% to $72.18 billion from a year earlier, after falling 17.9% slide in November.

"Poor Chinese numbers are likely to pressure commodities and possibly equities," Dariusz Kowalczyk, chief investment strategist at S J S Securities, said in an emailed report Tuesday.

The nation's trade surplus was $38.98 billion, narrowing from $40.09 billion in November, the customs bureau said. For the year, China's trade surplus totaled $295.46 billion, compared to $262.2 billion in 2007.

"The difficulty of obtaining trade finance in the closing months of 2008 may have had a further exacerbating effect on the headline number," wrote Jing Ulrich, J.P. Morgan's chairwoman of China equities, referring to the contraction in exports.

Ulrich added that China's exports will likely be flat this year compared to 2008, although trade figure for the early months of the year are likely to show a contraction.