In the first half of the year, by destination, China’s largest trading partner is ASEAN countries. ASEAN countries contributed 15.8% of China’s total export (Figure 1) and 14.7% of total import (Figure 2). This reflects the closer economic ties between China and ASEAN countries.
By composition, Vietnam contributed 4% of total China’s exports (Figure 3), followed by Malaysia (2.6%), Singapore (2.4%), and Thailand (2.3%). In terms of total import, meanwhile, Malaysia accounted for 3.8% of China’s total imports (Figure 4), followed by Vietnam (3.1%), Indonesia (3.0%), and Thailand (2.1%).
Looking at the trend, although the growth rate of Chinese exports to ASEAN countries showed a downward trend due to the regional currency depreciation caused by the continuous interest rate hikes by the Fed, it was still positive in the first six months of the year (Figure 5). However, China’s import growth seems to be affected by its slower economic momentum and purchasing power. China’s import demand from ASEAN countries fell by 8.3%, 6.1%, 6.3%, 5.8% and 5.5% in January and February, March, April, May, and June respectively (Figure 6).
This analysis has somehow refuted the Chinese government’s claims that its economy is doing well. Not only cutting down the import demand from ASEAN countries, Figure 7 shows that China also reduced its overall import demand since October last year.
In the past few years, the Chinese economy has been supported by huge export demand in the world. The continuous pressure of high inflation and the rise in living costs during the Covid-19 outbreak and the Ukrainian invasion, however, led some countries to reduce their import demand for Chinese economy in these two years. In other words, the slowdown of global import demand has led to a decline in China’s export volume. In addition, although some governments have increased interest rates to reduce the spread of the United States, some currencies still seem to be depreciating. In June, total China’s exports even experienced a double-digit drop.
Looking at ASEAN countries, in January & February, March, April, May, and June, China’s import demand from Malaysia has decreased by 16.9%, 11.3%, 11.9%, 10.1%, and 9.6% year-on-year respectively (Figure 7). During this period, China also faced slower imports demand from Vietnam, Thailand and Singapore. The Philippines saw the largest decline, with year-on-year decreases of 21.5%, 20.7%, 20.5%, 20.6% and 21.0% in January & February, March, April, May and June, respectively (Figure 7).
In view of the large-scale trade between Asia and China, economic uncertainties such as the high youth unemployment rate and the unstable political condition in some ASEAN countries may not only directly lead to the decline in output production of China and ASEAN, but might also slow down the entire regional supply chain through input-output interlinkages.
