ASEAN fears ‘flood’ of Chinese imports as tariffs bite
Southeast Asia could be targeted by Beijing after the United States cuts off its market access
Fears are growing that China could flood its neighbors with cheap exports, triggering a trade war whirlwind after President Donald Trump’s tornado of tariffs.
Locked out of the United States market after Chinese imports were hit by a massive 54% hike in duties, Beijing is looking to dump its manufacturing over-capacity on Southeast Asia.
“If tariffs cut off access to American buyers, this challenge could deepen as subsidised Chinese imports flood Southeast Asia and other emerging markets,” Shay Wester, the director of Asian Economic Affairs at the Asia Society Policy Institute, said.
“ASEAN [the Association of Southeast Asian Nations] governments are already taking steps to curb the influx. Vietnam and Indonesia have imposed a range of anti-dumping tariffs on Chinese goods, and Thailand announced measures to monitor cheap imports,” he wrote.
Warning signs:
- Indonesia’s textile sector has shed tens of thousands of jobs in just six months as heavily subsidized Chinese exports destabilize the market.
- More than 2,000 factories in Thailand have closed this year due to a wave of “cheap” steel and other products.
- Across the ASEAN region, local manufacturers are struggling to stay competitive.
There appears to be very little wriggle room for Beijing.
Delve deeper: “But Chinese exports that are shut out of the US market need to go somewhere else. While this might be good news for consumers, Southeast Asian manufacturers are already struggling with Chinese industrial overcapacity,” Wester said.
Between the lines: There appears to be very little wriggle room for Beijing as cracks were already appearing in China’s export-driven economic model.
Bottom line: Even before Trump’s tariffs, the world’s second-largest economy was involved in a war of words with the US and Europe over “trade and investment barriers.”
Big picture: Markets across the Asia-Pacific region tanked on Monday. Hong Kong’s Hang Seng Index plunged more than 13%, the biggest drop since the 1997 Asian Financial Crisis. Shanghai’s CSI 300 Index was down more than 7% before Chinese state intervention.
China Factor comment: Wildcard Trump has taken a wrecking ball to the global economy, sparking concerns of a worldwide recession. He would be better served by sticking to golf balls at his Mar-a-Lago resort in Florida.