China’s trade surplus shrinks to the smallest in six years

There's little doubt that growth is slowing for the world's second largest economy, and the newest numbers on China's trade surplus underscore that point.

Data released on Friday showed import and export growth had slowed significantly in 2011 making for the country's smallest trade surplus in six years. And while China's trade partners — particularly the United States — might cheer that news, the numbers also indicate that China's domestic demand is declining as well, as evidenced by a big dip in imports in December. Add those factors to an overall slide in production and manufacturing and it's clear that China will face more challenges in the months to come.

China's trade surplus has been a politically dicey issue for US-China relations and has become a political focal point. Beijing has pledged to do more to bridge the gap, but scaling back the trade surplus lies in growing domestic consumption. The trade gap shrunk from $155.14 billion from $181.51 billion in 2010, according to the new numbers.