In a significant development, recent data unveils a notable shift in China’s export destinations, with Southeast Asia surpassing the United States as the primary recipient of Chinese exports for the first time last year. These figures, released on Friday, underscore the ongoing recalibration of global trade dynamics amid the evolving economic relationship between Washington and Beijing.
According to the data, the 10 nations comprising ASEAN collectively purchased $524 billion worth of goods in the past year, surpassing both the $500 billion directed to the US and the value of shipments to the European Union. While indicative of a gradual decoupling between China and the US, the transition is not a straightforward separation. Chinese exports to Mexico, for instance, saw an increase of over 5% through November, with companies likely strategically redirecting certain products there for final sale in the US, thus circumventing US tariffs.
Interestingly, exports to Thailand and Vietnam experienced less significant declines compared to other regions. Chinese and foreign firms have increasingly adopted a strategy of shipping goods to these countries for finalization before re-exporting them to developed nations. The concept of “elongated supply lines,” as highlighted by the Bank of International Settlements last year, seems to be influencing these trends.
The sustained deflationary trend in China is also contributing to the shift, reducing the value of Chinese exports and making them more cost-effective for foreign consumers. In October, the export price index reached its lowest point since 2006, with only a slight uptick in November.
The economic slowdown within China has played a role in this deflation, impacting imports such as semiconductors, which experienced a double-digit decline last year. Despite these complexities, a standout in the data is the substantial increase in trade, witnessing a nearly 50% surge in exports and a notable 13% rise in imports. Chinese companies have seized opportunities presented by the withdrawal of competitors from other nations, capitalizing on the market gap and significantly increasing sales of automobiles and machinery.
As the dynamics of Chinese exports continue to evolve, the International Centre for Trade Transparency and Monitoring is closely monitoring these trends, providing valuable insights into the complex landscape of global trade relationships.