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Southeast Asian exports to China rise on trade war fears
SINGAPORE — China-bound exports from Southeast Asia have increased as businesses move up shipments before the Sino-American trade war intensifies further, setting the stage for a drop-off later that threatens to put the brakes on the regional economy.
Re-exports of nonoil goods in the global trade hub of Singapore increased 9.4% on the year in November, according to the city-state’s government. Their value exceeds 20 billion Singapore dollars ($14.5 billion) a month, with nearly 30% going to China and Hong Kong.
Many companies procure materials from across Asia, making finished goods in China for shipment to the U.S.
Singapore’s re-exports spiked after July, when the U.S. began imposing additional levies on Chinese goods. Re-exports to China rose on the year in October.
Companies are front-loading shipments before the trade war intensifies, said Chua Hak Bin of Maybank Kim Eng Research.
Malaysia’s exports in October climbed 17.7% on the year to 96.3 billion ringgit ($23 billion), topping the 90 billion mark for the first time in a single month. Shipments to China, the biggest destination, increased 33% as electrical machinery and oil product shipments grew.
Thailand, whose China-bound exports plunged in September, saw a turnaround in October as chemical and machinery parts shipments climbed.
The U.S. has decided for now to not to increase its 10% additional tariff on $200 billion of Chinese goods to 25% this coming January. But much uncertainty hangs over the future.
With current conditions essentially eating into future demand, trade may begin to slow as soon as the new year. Washington and Beijing have entered into a 90-day cease-fire. But conditions surrounding global trade remain vulnerable, and Malaysia’s record exports in October must be assessed with caution, Malaysian Finance Minister Lim Guan Eng has said.
China’s export growth is expected to decelerate from 11% in 2018 to 6% next year, according to Nomura Securities. If the Chinese economy loses steam, Southeast Asian economies deeply linked through manufacturing supply chains will inevitably take a hit.
Source: https://asia.nikkei.com/Economy/Trade-War/Southeast-Asian-exports-to-China-rise-on-trade-war-fears