A global growth slowdown, reduced domestic spending and an ongoing trade war with the US are contributing to weakness in the world’s second-largest economy.

Chinese exports fell 4.4% last month compared with December 2017, and imports contracted by 7.6% in their biggest decline since July 2016.

Economists polled by Reuters had predicted that exports would rise by 3% in December, especially given the growth boosting measures employed recently by the Chinese government, such as infrastructure spending and tax cuts.

But the latest trade figures sent Asian stock markets downward, with companies listed on the Hong Kong’s Hang Seng index closing at 1.38% down on Monday, and shares listed in Shanghai and Shenzen falling 0.87%.

Despite a gloomy end to the year, China’s total exports rose 9.9% in 2018 – its strongest trade performance in seven years – and imports grew 15.8%.

“Export growth dropped more than anticipated as global growth softened and the drag from US tariffs intensified. Import growth also fell sharply in the face of cooling domestic demand. We expect both to remain weak in the coming quarters,” London-based economic research consultancy Capital Economics said in a note.

Despite the new 10% tariffs on imported Chinese goods imposed by President Trump in September, the country’s trade surplus with the US reached a record high in 2018, rising 17.2% to US$323.32 billion. The US census bureau had estimated the gap to be even larger at US$345 billion.

Any impact on exports imposed by the tariff rise was not immediately felt as American importers rushed through purchases of Chinese goods in order to beat further tariff increases. This so-called ‘front loading’ effect has now waned, but analysts are concerned that the resulting drop is well below previous trends and signals further weakening in China’s exports.

US tariffs aren’t completely to blame, however, as exports to Japan and the EU also shrunk, and shipments to Hong Kong fell 26%. Weakening global demand is a real risk to China even if a resolution on the trade dispute with the US is reached by the 1 March deadline.

Falling demand in China is also impacting global companies. Apple warned earlier this month that its revenues would be lower than expected, partly due to a decrease in consumer spending in China. And car sales in China, the world’s largest car market, also declined in 2018 for the first time since 1990, with Jaguar Land Rover attributing part of its lower revenues to a slowing Chinese economy.