CHINA'S trade focus is pivoting, as bilateral trade between China and Asean accounted for a bigger percentage of China's total trade volume for the first five months of 2020, compared to that with the United States or the European Union, a DBS report said.
Between January and May, China-Asean trade rose by 1 per cent year on year to US$1.6 trillion and accounted for 14.7 per cent of China's trade volume, according to a report by Nathan Chow, economist and strategist at DBS Group Research. This compares with 11 per cent with the US and 13.9 per cent for the EU, both of which are China's traditional trading partners.
During the same period, the South-east Asian bloc accounted for nearly 15.2 per cent of Chinese exports, Mr Chow wrote. While the US remained as China’s largest single-country export market, its share has declined to 15.5 per cent from as high as 19.2 per cent between 2017 and 2018, he said.
Apart from the lockdowns in the West, Mr Chow attributed the rise in China-Asean trade to an "increasingly fraught China-US relationship". He said some upstream companies have relocated to other bases in Asia, with the hope of dodging punitive tariffs from the US.
"Strategically, Beijing will need to forge closer trade ties with the rest of the world as tit-for-tat confrontation pounded bilateral trade with America," Mr Chow said, noting that China has already been replaced by Mexico as the top trading partner of the US in 2019.
"It is reported that state-run agricultural firms have recently paused purchases of US farm goods including soybeans. The halt is the latest sign that the hard-won phase-one trade deal is in jeopardy."
Among Asean counties, China's bilateral trade with Vietnam increased the most dramatically, Mr Chow noted. Outbound shipment to Vietnam grew fivefold in value from 2009 to 2019, while China's imports from Vietnam recorded a surge of 25.5 per cent year to date.
On the whole, technology products have been major contributors, with China importing US$51.8 billion worth of goods such as machinery and optical appliances from Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam.
"The combination of complementary industrial structure and lower logistics costs will strengthen the trade relationship between China and Asean countries, in our view. Further supporting this is the Regional Comprehensive Economic Partnership free trade agreement, which is scheduled to be finalised later this year," he said.