Worries over China’s economy and its impact on global growth weighed on financial markets Monday in the wake of trade data showing the country’s imports and exports both declined in December.
Imports dropped by 7.6% in December, while exports fell 4.4%, while China’s trade surplus with the U.S. hit a record $323.32 billion in 2018.
Not a great way to start the week for market participants growing increasingly edgy about the global growth outlook.
Investors have been fretting over the health of China’s economy — a global growth engine — for years, but their fears reached new highs as central bankers including the Federal Reserve’s Jerome Powell joined the choir. The global economy is expected to slow in 2019 — and every weaker figure out of China is adding to the worry of a global recession, no matter how rational that fear might be.
The decline in Chinese imports underlines weak domestic demand, according to some market participants, and that feeds into the narrative that China’s economy is cooling from within, while the weaker exports showed response to the trade spat with the U.S.
Making matters worse, a Reuters report suggested that Beijing will cut its 2019 forecast for gross domestic product growth to 6%-6.5%, compared with previous “around 6.5%”.
Asian stock indexes suffered under the news, with the Shanghai Composite Index SHCOMP, -0.71% and Shenzhen Composite Index 399106, -0.73% both closing 0.7% lower on Monday. The CSI 300 Index 000300, -0.87% dropped 0.9%.
ut there were three reasons to stay invested in Chinese equities, according to UBS UBS,