Agencies
Beijing’s strategy to reshape China’s trade profile to boost exports to Southeast Asia has been put to the test by a growing array of barriers in the region that are responding to supply chain shifts, analysts said, with the curbs also coming at a time of weakening shipments to the 10-nation bloc.
China is facing a surge of trade restrictions amid concerns of industrial overcapacity – as it produces more of certain good than it is able to sell or use – and Vietnam became one of the latest countries to officially launch an anti-dumping investigation into certain types of hot rolled coil steel from China and India late last month.
India started investigating cheap steel imports from China and Vietnam a day after the Vietnamese announcement, according to Reuters, but it has yet to officially confirm the investigation.A total of 96 trade barrier investigations targeted at China were announced by its trade partners from January to July, already exceeding the 63 in the whole of last year.
At least 74 were related to anti-dumping – exports of a product at a price lower than the price normally charged in its own market – with two ongoing cases from Vietnam focused on steel and one from Thailand on aluminium, according to China Trade Remedies Information, a platform under the Ministry of Commerce.The United States, India and the European Union levied the most numbers of complaints among China’s trade partners.
On Wednesday, China confirmed its exports grew by 7 per cent in July from a year earlier, with shipments to the Association of Southeast Asian Nations (Asean) bloc outpacing the overall growth after rising by 12.15 per cent last month, accounting for 15.8 per cent of the total foreign trade value.
However, China’s exports to the Asean bloc still weakened from the 15 per cent growth registered in June.Asean countries have reported that their growing trade deficit – as they import more goods and services than they export – with China widened from US$44.8 billion in 2013 to US$137.3 billion in 2022.
And more trade barriers from the Asean bloc of countries appear to be on the way.
Malaysia’s trade ministry announced this week that it would present its anti-dumping legislation plans to parliament next year to protect industries against "effects of unfair trade following the large influx of cheap imported goods from countries, including China”.In June, Indonesia’s trade ministry also announced plans to impose up to 200 per cent tariffs on certain China-made products to protect its manufacturing industry against dumping practices triggered by Western nations’ trade wars with China.
And on Thursday, Indonesia and Japan agreed on amendments to an economic agreement to reduce or remove trade barriers, Reuters reported.The moves by China’s neighbours suggested the region sees a more imminent need to rebalance some of its trade relations with China as an increasing proportion of cheaper Chinese imports could harm their domestic industries.
Manufacturing and export heavy Asean economies, such as Vietnam, Indonesia and Thailand, have been prime locations for Chinese exports and businesses seeking to avoid the impact of the US-China trade war.Steel has been an area that has gained increased attention, with Vietnam the destination for 11.9 per cent of China’s steel exports in the first half of this year.
This represented a slight increase amid increasing accusations regarding China’s exports of its overcapacity, which has opened China up to potentially more trade barriers.
"This trend is driven by growing trade imbalances and concerns over economic dependence,” said Shay Wester, the director of Asian economic affairs and outreach director at the Asia Society Policy Institute.
"This imbalance is due to a surge in Chinese imports, ranging from low-cost consumer goods to hi-tech products like electric vehicles.
"These imports put considerable pressure on local industries and raise concerns about overdependence on China, especially as Asean’s manufacturing sector heavily relies on Chinese components.”The share of China’s exports to developed economies such as the US, Europe, Japan and South Korea have dropped under the context of the US-China trade war and governments calling to de-risk China from their supply chains.
Yet, officials in Beijing have repeatedly touted China’s relations with the Southeast Asian nations and members of its Belt and Road Initiative as thriving, and since 2020, the Asean bloc surpassed the EU to become China’s largest trading partner.
Together with the Regional Comprehensive Economic Partnership (RCEP) trade pact, which came into force in January 2022 and includes the Asean bloc plus Australia, Japan, South Korea and New Zealand, Beijing has touted its trade relations with regional partners as being strong despite "uncertainties in the geopolitical environment”.
Deborah Elms, head of trade policy at the Hinrich Foundation, said the changing trade landscape globally represented a combination of issues, including a shift in dependence on new economic actors, concerns about possible future supply chain disruptions, technological acceleration and a strong sense of drift from major economic players.
"Now, it’s become much easier to pull out protectionist tools of all sorts, even with minimal justification,” said Elms.