China’s exports, an engine of the growth that has helped to transform a poverty-stricken backwater into the world’s fourth-largest economy, slumped last month by their fastest pace in a decade.

The fall was widely expected by economists, as the Western countries that are China’s biggest buyers slumped in the second half of last year, emphasising how China’s increasing dependence on exports in recent years has left it vulnerable to international currents.

Exports fell 2.8 per cent in December after declining 2.2 per cent in November.

The export decline in December was the sharpest since April 1999, according to JPMorgan.

Imports dropped 21.3 per cent from December 2007, an even steeper slump than the 17.9 per cent fall in November, the General Administration of Customs reported.

However, export declines of 42 per cent and 17.4 per cent reported by the neighbouring Taiwan and South Korea for December indicate more bad news ahead for China, putting further pressure on Beijing to do more to protect jobs in export industries and prevent a rise in social unrest.

China has raised value added tax rebates on exports five times since the end of July on a range of products, and officials have pledged to raise rebates further for some labour-intensive industries to protect jobs.

An estimated ten million migrant workers out of an estimated 130 million nationwide have lost their jobs in recent months.

The authorities are hoping that a massive 4.0 trillion yuan (£400 billion) economic stimulus package announced in November and five interest rate cuts since mid-September will ensure the 8.0 per cent economic growth that the Government regards as the minimum to ensure sufficient new jobs to absorb the millions who enter the workforce each year.

Ting Lu, an economist with Merrill Lynch in Hong Kong, said that China’s preponderance of low-end exports could help at a time when consumers around the world are looking for bargains.

"I do expect some deterioration of export growth in the next couple of months but it will not be much worse because China’s exports are relatively resilient compared with Taiwan or South Korea," Mr Ting said.

"Taiwan's exports are concentrated in electronic goods, which are quite volatile. China’s exports are less volatile because a lot of exports are low-value-added, necessary goods for consumers. They need to consume these kinds of cheap Chinese goods.”

The wilting imports ensured that China reported a huge trade surplus in December of $38.98 billion (£27 billion), just shy of November's all-time high of $40.1 billion.

For all of 2008, the surplus swelled to a record $295.46 billion from $262.2 billion in 2007.

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