China's export effort appears to have finally cracked under sustained pressure from US tariffs and a slowdown in global trade

Key points: China's trade surplus with the US halved as tougher tariffs took their toll

China's trade surplus with the US halved as tougher tariffs took their toll Weak imports point to a domestic economy cooling rapidly

Weak imports point to a domestic economy cooling rapidly China's appetite for iron ore hit a 10 month low

Exports in US dollar terms fell 20.7 per cent in February, far worse than a 5 per cent drop the market had forecast.

Imports fell by 5.2 per cent, which was also far weaker than expected.

The collapse in both domestic and external demand is bad news for Australian exporters relying on China, and the region, as their most lucrative source of income.

China's overall trade surplus for the month came to $US4.1 billion — wafer thin by its usual standards, and far narrower than the almost $US30 billion forecast.

The impact of US tariffs can be seen in the politically sensitive reading of the bilateral trade balance.

China's surplus with the US almost halved from $US27.3 billion in January to $US14.7 billion last month.

It is a sudden turnaround given data released by US customs earlier this week reported the deficit with China blew out by 19 per cent in December.

Overall, the US recorded a $US621 billion trade gap with China in 2018 — the largest since 2008.

Economists not anticipating a rebound soon

"[Friday's] trade figures reinforce our view that China's trade recession has started to emerge," ANZ's China economist, Raymond Yeung, said.

"Looking ahead, we find little reason to expect a rebound in the near term on the back of a sluggish global electronics cycle."

But it should be noted the fall may well have been exacerbated by interruptions caused by Lunar New Year celebrations, which started in early February this year.

Capital Economics senior China economist Julian Evans-Pritchard described the trade data as downbeat, even accounting for seasonal distortions.

"Tariffs are weighing on shipments to the US, but broader weakness in global demand means that, even if [US President Donald] Trump and Xi [Jinping, China's President] finalise a trade deal soon, the outlook for exports remains gloomy," Mr Evans-Pritchard said.

He said the evidence points to a cooling of global demand putting the brakes on China's domestic demand.

"A row back in US tariffs would provide a mild boost to exports but not enough to offset the broader external headwinds," he said.

"Meanwhile, with policy stimulus unlikely to put a floor beneath growth until the second half of the year, imports will remain under pressure in the near-term."

Iron ore imports hit a 10-month low

Customs data also showed China's iron ore imports fell to a 10-month low in February.

China imported 83 million tonnes of iron ore over the month, well down on the 91 million tonnes in January, and 1.5 per cent lower than a year ago.

But analysts ascribed much of the downturn to crimped demand from Lunar New Year shutdowns by traders and steel mills, as well as supply disruptions caused by bad weather.

Earlier this week, Chinese Premier Li Keqiang said the Chinese economy would likely slow this year.

He told the National People's Congress the official economic growth target for 2019 will be 6 to 6.5 per cent.

That would be a step down from the 6.6 per cent recorded last year — which was China's slowest pace of growth since 1990.

ANZ commodity analyst Daniel Hynes said elevated inventories at the ports and higher prices weakened iron ore demand, while coal imports held up relatively well, with volumes up 5 per cent on a year ago.

"We suspect tighter Chinese regulations on coal imports have yet to be felt in the trade data," he said.