Southeast Asia overtook US as China’s 2nd major trade partner, and why it matters

Merchandise exports and imports by region 2012Q1 to 2017Q4 (source: WTO-UNCTAD estimates, chart from WTO: World Trade Statistical Review 2018)

“The U.S. is losing importance as a trading partner of China as their tariff war drags on, dropping a notch to third place in the first half of 2019 to trail the European Union and Southeast Asia…” reported by Nikkei Asian Review on July 13.

“… Trade with the Association of Southeast Asian Nations grew 4% to $291.8 billion, topping the American tally. Should current tensions continue, the bloc could rank above the U.S. for the full year for the first time on record …”

For various reasons, ranging from Trump’s tariffs to the lower wages in the ASEAN region etc, both OECD and Chinese manufacturers have been moving their factories out of mainland China to Southeast Asia. While such a relocation has brought some negative impacts on China’s ‘world’s workshop’ status, both China and nations in the region have greatly benefited from this knitting and networking, by boosting production as well as consumption. In common term, the pie is getting bigger and bigger jointly.

Take Vietnam as an example, according to WTO’s 2018 report (p.46), it “entered the top ten exporters (of office and telecom products) in 2017, mostly thanks to distinctly increased exports to China …” It means Vietnam has been included as an active part of a transnational production assembly line in East Asia as a whole.

After 30 years of rapid growth, China’s GDP still maintains above 6% annual growth rate. How about the ASEAN nations now and in future?

The OECD’s “Economic Outlook for Southeast Asia, China and India 2019: Towards Smart Urban Transportation” report firstly reveals that the 2012-16 average rate of ASEAN-10 was 5.1%, and will continue to grow at 5.2% for 2019-23 (p.1); and secondly suggests that the regional integration through a brilliant ‘smart’ upgrade of the transportation not just among themselves but also with China and India will help realize “the potential benefits of urbanization for growth … (p.22)”

It is another one of the many steps fostering the self-overcoming growth of Eurasia as a newly integrated zone vs the trans-Atlantic zone. The competition between these two zones, bringing the future generations to war or co-existence, will determine the developments of the human civilization on all fronts.

The opinions expressed are those of the author, and not necessarily those of China Daily Mail.



Categories: Trade & Investment

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