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The Dragon’S Bargain: How China’S Cheap Exports Reshape Southeast Asian Markets
(MENAFN- The Rio Times) (Analysis) China's economic slowdown has sparked a surge in low-cost exports, reshaping markets across Southeast Asia.
Chinese manufacturers now redirect excess inventory abroad, causing prices to plummet worldwide. This flood of inexpensive goods has ignited tensions and forced local industries to adapt or perish.
The purchasing managers' index for China dipped to 49.1 in August, marking its fourth consecutive month below 50.
Despite this economic downturn, Chinese exports continue to thrive. In July, exports reached $300.5 billion, a 7% increase from the previous year.
Chinese companies have slashed prices on various products to maintain their competitive edge. Steel, home appliances, and integrated circuits have seen significant price drops.
Steel exports, in particular, have surged by 22% to 61.23 million tonnes in the first seven months of 2024. This influx of cheap goods has sent shockwaves through Southeast Asian economies.
In Thailand, half of the ceramics factories in Lampang province have shut down. Indonesian textile workers face widespread job losses, while Malaysian retailers struggle to compete.
Meelarp Tangsuwana, a Thai ceramics factory owner, exemplifies the challenges faced by local businesses.
His hand-painted soup bowls, priced at 18 baht, now compete with identical Chinese products selling for just 8 baht. This stark price difference has left many local artisans bewildered and struggling to survive.
The flood of Chinese goods benefits from several factors. These include China's massive e-commerce market, improved logistics, and free trade agreements.
The Regional Comprehensive Economic Partnership has further facilitated Chinese products' entry into local markets. Southeast Asian governments have begun implementing protective measures.
Thailand's new administration has pledged to tackle illegal imports and support local businesses. Malaysia imposed a 10% levy on imported goods valued at 500 ringgit or less.
The Dragon's Bargain: How China's Cheap Exports Reshape Southeast Asian Markets
Indonesia has taken more drastic action, introducing import tariffs of 100% to 200% on certain Chinese goods.
These measures aim to protect small and medium enterprises, which account for 60% of Indonesia's economic output. However, some experts argue that these efforts may be insufficient.
Ameer Ali Mydin of the Malaysia Retailers Association believes his country has become a "dumping ground" for Chinese excess capacity. He advocates for a flat tax of up to 20% on all overseas online purchases.
The situation has sparked debates about balancing free trade agreements with the need to protect local industries.
Some fear that entire sectors of their economies may slip into Chinese control. Thai logistics workers, for instance, report being undercut by "zero dollar transport" schemes.
As Western markets become less accessible, Chinese exporters increasingly target Southeast Asia.
This shift has forced local businesses to innovate or face extinction. Some advocate for stricter border controls and quality standards to level the playing field.
The influx of cheap Chinese goods presents both opportunities and challenges for Southeast Asian economies.
Chinese manufacturers now redirect excess inventory abroad, causing prices to plummet worldwide. This flood of inexpensive goods has ignited tensions and forced local industries to adapt or perish.
The purchasing managers' index for China dipped to 49.1 in August, marking its fourth consecutive month below 50.
Despite this economic downturn, Chinese exports continue to thrive. In July, exports reached $300.5 billion, a 7% increase from the previous year.
Chinese companies have slashed prices on various products to maintain their competitive edge. Steel, home appliances, and integrated circuits have seen significant price drops.
Steel exports, in particular, have surged by 22% to 61.23 million tonnes in the first seven months of 2024. This influx of cheap goods has sent shockwaves through Southeast Asian economies.
In Thailand, half of the ceramics factories in Lampang province have shut down. Indonesian textile workers face widespread job losses, while Malaysian retailers struggle to compete.
Meelarp Tangsuwana, a Thai ceramics factory owner, exemplifies the challenges faced by local businesses.
His hand-painted soup bowls, priced at 18 baht, now compete with identical Chinese products selling for just 8 baht. This stark price difference has left many local artisans bewildered and struggling to survive.
The flood of Chinese goods benefits from several factors. These include China's massive e-commerce market, improved logistics, and free trade agreements.
The Regional Comprehensive Economic Partnership has further facilitated Chinese products' entry into local markets. Southeast Asian governments have begun implementing protective measures.
Thailand's new administration has pledged to tackle illegal imports and support local businesses. Malaysia imposed a 10% levy on imported goods valued at 500 ringgit or less.
The Dragon's Bargain: How China's Cheap Exports Reshape Southeast Asian Markets
Indonesia has taken more drastic action, introducing import tariffs of 100% to 200% on certain Chinese goods.
These measures aim to protect small and medium enterprises, which account for 60% of Indonesia's economic output. However, some experts argue that these efforts may be insufficient.
Ameer Ali Mydin of the Malaysia Retailers Association believes his country has become a "dumping ground" for Chinese excess capacity. He advocates for a flat tax of up to 20% on all overseas online purchases.
The situation has sparked debates about balancing free trade agreements with the need to protect local industries.
Some fear that entire sectors of their economies may slip into Chinese control. Thai logistics workers, for instance, report being undercut by "zero dollar transport" schemes.
As Western markets become less accessible, Chinese exporters increasingly target Southeast Asia.
This shift has forced local businesses to innovate or face extinction. Some advocate for stricter border controls and quality standards to level the playing field.
The influx of cheap Chinese goods presents both opportunities and challenges for Southeast Asian economies.
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