WRAPUP 2-China's exports, imports fall as economy hits wall

* Shock drop in exports, imports from year earlier

* China pledges to cut taxes, boost spending

* Factory-gate inflation plunges

By Langi Chiang and Zhou Xin

BEIJING, Dec 10 (Reuters) - China's exports and imports shrank unexpectedly in November as the world's fourth-largest economy slowed in a startlingly abrupt way in response to the global credit crunch.

The drop in exports from year-ago levels was the largest since April 1999, while the decline in imports was the steepest since monthly records kept by bankers began in 1993.

Other Asian export power houses, including South Korea and Taiwan, had already reported a drop in shipments last month as the shock to confidence that followed the collapse of Lehman Brothers in mid-September reverberated through the world economy.

Economists had expected China's exports to rise 15 percent and imports to be up 12 percent compared with November 2007. But the data showed exports fell 2.2 percent from a year earlier and imports dropped by 17.9 percent.

"Global demand for Chinese products is vanishing," said Gene Ma, an economist at China Economic Monitor, a Beijing consultancy. "Secondly, the credit freeze in importing countries has made it hard for Chinese exporters to sell abroad."

China's leaders wrapped up a three-day strategy meeting on Wednesday by setting steady growth as their top objective in 2009, pledging to ramp up public spending and cut taxes.

"At present, China's economic operation is facing greater difficulties," a state radio report on the meeting said. "Downward pressure on the economy is increasing."

Because imports fell more sharply than exports, China's trade surplus actually soared to an all-time high of $40.1 billion last month, eclipsing the previous record of $35.2 billion set in October, the customs administration reported.

A plunge in the price of oil and other commodities cut China's import bill, but economists said the drop also reflected spreading weakness in home-grown demand as businesses and consumers battened down the hatches.

"It's just a start. Exports and imports will continue to fall in the coming months, probably until next June," said Zhang Shiyuan, an analyst with Southwest Securities in Beijing.