ING ING Groep NV

By Mark Magnier 

BEIJING--Chinese exports declined for the year, marking their worst performance since 2009, as weak demand continued to weigh on the world's second-largest economy.

Exports, however, fell less than expected in December thanks to a favorable comparison with year-earlier figures. The improved monthly results don't signal a major recovery this year despite a weaker yuan, economists said.

"In the next few months, the comparative price effect will fade out and export growth will recover," ING Group economist Tim Condon said. "But it's not going to be as strong as in 2013 or 2014."

According to the General Administration of Customs, China's exports fell 1.4% in December in dollar terms from a year earlier, after a drop of 6.8% in November. This was a more modest decline than the 8.0% fall forecast by 15 economists surveyed by The Wall Street Journal. In yuan terms, exports rose last month. Imports last month fell 7.6% from a year earlier, compared with an 8.7% decline in November.

The country's trade surplus widened to $60.1 billion in December from $54.1 billion in November. Last year's weak Chinese exports and even weaker imports led to a record $594.5 billion annual trade surplus, compared with $382.5 billion in 2014, the agency said, as full-year exports fell 2.8% and imports fell 14.1%.

Despite the decline in exports last year, the Asian giant managed to increase its share of global trade.

"China's declining exports in 2015 were mainly due to sluggish external demand on the back of slowing global economic recovery since the financial crisis," Customs spokesman Huang Songping told reporters Wednesday. "But China's export performance is better than other major economies in the world."

Few economists see a huge export turnaround ahead, however, with exports no longer as important for China as they used to be. December's improved outbound data may reflect a one-time boost as companies rushed to meet year-end orders. While business sentiment in Germany picked up recently, confidence surveys in the U.S. have weakened. And on the import side, domestic demand and global commodity prices remain weak.

"Demand may not be a big driver," said Standard Chartered Bank economist Ding Shuang.

Rong Zhaoxia, a saleswoman with Jiangmen, Guangdong-based Bonanza Metalware Ltd., which sells stainless steel kitchenware to Europe and Australia, said the company's export shipments fell in 2015 from 2014 levels, with the decline accelerating in the fourth quarter. Despite tougher conditions, the company doesn't expect to lay off any of its 200 or so workers, she said, although it may lose some through attrition.

"The world economy is not good, and both Europe and Australia are declining," she said. "Our contracts dropped in number terms and our sales in 2015 declined over 2014."

Mr. Huang of the customs agency said Beijing will keep a close eye on the yuan's movement. China has seen a significant depreciation in the yuan in recent weeks as the central bank introduces more flexibility into the currency trading system, leading to a 1.5% depreciation over the past week--its sharpest weekly decline since August. A depreciating currency tends to makes exports less expensive when purchased overseas.

Shipping companies said the weaker yuan should spur outbound trade flows. "Chinese exporters often tell us that with rising costs in China, it is a battle to stay competitive internationally," said Tim Smith, North Asia chief representative with shipping company Maersk Group Ltd. "Export trade performance was relatively weak in 2016, and anything that gives exports a boost is welcome."

Ms. Rong said the yuan's recent slide isn't a huge factor for her company, which generally fixes prices months in advance, although it should provide more modest opportunity for discounting moving forward. She said she expects the yuan to depreciate to around 6.9 yuan to the dollar this year--it is currently trading around 6.57--adding that she hopes the downward slide is gradual since volatility tends to hurt their business.

While the International Monetary Fund recently said that China's currency was fairly valued, China's large annual surplus could become a U.S. political issue this year, particularly if Republican presidential candidate Donald Trump does well, economists said.

"He's already lashed out and said we're losing everything to China," said ING's Mr. Condon. "If he's the Republican presidential candidate, I suspect there will be more saber rattling on that."

Grace Zhu and Liyan Qi contributed to this article.

Write to Mark Magnier at mark.magnier@wsj.com

(END) Dow Jones Newswires

January 13, 2016 00:05 ET (05:05 GMT)

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