Recession in the US, Europe and Japan has pulled the rug from China's exports, and for the first time in seven years the galloping Chinese economy saw the year-on-year growth rate of Chinese exports dropping 17.2 per cent as consumers in the West started to reign in spending.
Releasing the export and import figures, the General Administration of Customs of China stated that although its foreign trade was nearly $2.56 trillion in 2008, its export growth slowed 17.2 per cent last year, compared to the 27-per cent growth in 2007
In spite of slowing down of exports, China's trade surplus was $295.47 billion, which was up by 12.5 per cent.
China's main exports was to the European Union, where bilateral trade was $425.58 billion, which saw a rise by 19.5 percent and for the past five years its exports to the EU has grown by nearly 21 per cent although the trade between China and Europe was almost nil two decades ago.
In the recent past, the EU has made China its main target for trade investigations, launching nearly 49 anti-dumping measures against Chinese imports, which is less than 2 per cent of total Chinese trade.
Last month, the EU said it would ban a chemical used in Chinese leather shoes and sofas that can cause severe allergic reactions. This ban will largely affect goods from China and during the same period the EU slapped anti-dumping duties of 26.5 per cent to 85 per cent on China-made fasteners over the next five years.
In 2008, China-US bilateral trade was $333.74 billion, an increase of 10.5 percent from 2007, the lowest growth rate in the seven years that passed since China's entry into the WTO.
China's exports to the US reached $252.3 billion in 2008, up by 8.4 per cent, showing a single digit drop in the growth rate for the first time in seven years but its trade surplus rose 4.6 per cent to $170.86 billion. Its imports from the US were $81.44 billion, up by 17.4 per cent.
The General Administration of Customs said in its report that one of the main reasons for the decline in China-US bilateral trade was the economic crisis led US consumer to lower their spending. The General Administration of Customs claims the appreciation of the Renminbi had a negative impact on the price of Chinese products, rendering them globally uncompetitive and affecting US exports.
Japan remained China's third-largest trading partner, with bilateral trade at $266.78 billion, a rise of 13 per cent last year.
India - China trade rose in 2007 with Chinese exports jumping by over 521 per cent. However, 2008 has put a brake on China's trae with its 10th biggest trading partner; though bilateral trade still rose by an impressive 34 per cent to $51.78 billion, it slowed down by 21.5 per cent compared to 2007.
In order to boost its export sector in certain industries, this week the Chinese government raised tax rebates for textiles and garment exports from 14 per cent to 15 per cent, the second since its 1-per cent increase in November from 13 per cent to 14 per cent. These rebates have helped exporters reduce their costs.
It also raised the export rebate for the toy industry to 14 per cent, due to the dwindling toy exports, hit by a series of order cancellations after high levels of lead was found in the paint used in Chinese toys.