Southeast Asian trade with China runs the gamut from palm oil to electronics manufacturing. But those with the natural resources China needs to continue expanding will be able to ride out a global downturn. Here is a brief roundup of the some Southeast Asian economies’ trade ties with China:
Malaysia
Malaysia’s huge palm oil production capacity and rocketing demand from China for the commodity – to be used in food products and as cooking oil – means it can rely on those exports in a downturn. But sectors like electronics manufacturing are being hollowed out by Chinese factories, said Tim Condon, head of research at ING Financial Markets.
Singapore
Tourism, manufacturing investment and construction are likely to help Singapore through a global downturn, according to UBS. But it lacks natural resources to sell to China and remains highly exposed to import demand from the G3 countries. The Swiss bank dropped its GDP forecast for Singapore from 6.8% for the year to 3.5%.
Thailand
Thailand’s auto industry, good infrastructure and flexible labor force will mitigate its dependence on exports. Its position as the “Detroit of Southeast Asia” also gives it a leg up, particularly for companies seeking to diversify from China.
Vietnam
Vietnam is benefiting from China’s move up the production value-chain, said Cheung Tai-Hui, an economist at Standard Chartered. Production of goods like sneakers and clothing, plus multinationals’ desire to diversify their production bases mean Vietnam is well placed to capitalize on China’s rise. Vietnam is also China’s top coal supplier, shipping nearly 25 million tons northward last year.
Indonesia
Shipments of coal and liquefied natural gas (LNG) to China will insulate Indonesia from a drop in other exports. China National Offshore Oil Corporation is contracted to buy 2.6 million tons of LNG a year from an Indonesian site starting next year. “Commodity-related exports in Southeast Asia have been stable in recent years – except for Indonesia, where it’s 54% and rising. So Indonesia is less exposed to a global slowdown than the rest of the region,” said Edward Teather, an analyst at UBS.
You must log in to post a comment.