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China's trade report for December was underwhelming to say the least.
Imports and exports recorded the largest year-ended contraction since the second half of 2019.
Apple - Share - Price - Guide - Decline
If Apple's share price is any guide, the decline in Chinese exports is likely to get worse before it gets better.
ANZ Bank says it's now "likely" that China will experience a trade recession.
Expectations - Release - China - December - Trade
Even with low expectations heading into its release, China's December trade report was a horror show.
From a year earlier, the value of exports and imports tumbled by 7.6% and 4.4% respectively in US dollar terms, coming in well below market expectations that were actually centered around a modest increase.
Result - Percentage - Decline - Exports - Imports
Underlining just how weak the result was, the year-ended percentage decline in both exports and imports was the largest since the second half of 2016, another period when concerns about the Chinese economy were acute.
To Raymond Yeung, Chief Economist for Greater China at ANZ Bank, the speed of the trade downturn, impacted not only by a reversal of front-loading of orders before US and Chinese tariffs kicked in but also a slowdown in both the Chinese and global economies, means the risk of a trade recession has increased.
Trade - Recession
"A trade recession is likely," he says.
"The anecdotal reports of Chinese exporters front-loading their cargoes ahead of tariff hikes in 2019 may explain the strong exports seen in late 2018. However, in the months ahead, we are likely to see some payback of the earlier strength in exports."
Apple - Share - Price - % - Record
Apple's share price, having tanked by over 35% from the record high of $233.47 back in October last year, is one factor that makes Yeung uncomfortable about what lies ahead for the trade-exposed parts of the Chinese economy.
"The share price of Apple remains our preferred gauge of China's export outlook," he says, pointing to the chart below.
"We believe the financial market provides the...
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