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 at their fastest pace in a decade.

In a symptom of the growing toll on Asia’s powerhouse economy from the rapidly deepening global recession and collapsing world trade, the value of Chinese exports dropped by 2.8 per cent in the year to December.

The official figures from Beijing confirmed that China is suffering the steepest drop in its previously booming export trade since April 1999.

The news came as the World Economic Forum (WEF), which holds its annual meeting in Davos this month, gave warning that a “hard landing” for China’s economy, with annual growth dropping to 6 per cent or less this year, was a mounting danger to world economic and geo-political stability.

The warning came in the WEF’s annual Global Risks report. “This has its most dramatic impact firstly for China domestically . . . As China virtually implodes, this will have a major impact on the global economy,” Daniel Hoffmann, of Zurich Financial Services, co-sponsor of the analysis, said.

Anxiety over China’s fast-deteriorating economic fortunes was reinforced as yesterday’s data also showed that its imports had plummeted at a 21.3 per cent annual rate in the year to December. Economists said that falling imports indicate that even as China’s growth is hit by slowing foreign trade, its domestic economic activity is sliding even faster.

The trend is fuelling fears that China will succumb to social unrest. Slumping exports have already forced the closure of thousands of factories: as many as ten million migrant workers out of 130 million nationwide have lost their jobs. China’s authorities worry that this will trigger social upheaval as laid-off migrants stream home from coastal manufacturing areas with no money. Beijing hopes that a four trillion yuan (£400 billion) economic stimulus package announced in November will boost growth back to the 8 per cent level seen as the minimum needed to generate sufficient jobs.

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