Southeast Asian countries have become China’s biggest trading partner this year. At the same time, economic activity in wealthier nations has slowed because of the spread of the COVID-19 disease.
Trade between the Association of Southeast Asian Nations (ASEAN) and China reached $240 billion in the first five months of 2020. That is an increase of 4.2 percent over the same period in 2019, China’s state-run Xinhua News Agency said. Chinese trade with ASEAN is about 15 percent of its total trade worldwide.
Vietnamese Prime Minister Nguyen Xuan Phuc, left, and his staff prepare documents ahead of the Special ASEAN summit on COVID-19 in Hanoi, Vietnam Tuesday, April 14, 2020. ASEAN leaders met with their counterparts from China, Japan and South Korea.
China began easing restrictions related to COVID-19 in March. Vietnam and Malaysia eased their restrictions soon after. Many countries in other parts of the world are still struggling with shutdowns, supply system reductions and a lack of people buying products.
Jonathan Ravelas is the chief market strategist with Banco de Oro UniBank in the Philippine capital Manila. He said that Asian countries followed COVID-19 shutdown restrictions more closely than Western nations. Ravelas told VOA, “The way we do things…it’s better to deal with your peers. And that’s the reason (for) the potential bounce back in Asia.”
The European Union (EU) was China’s top trading partner last year after pushing out the United States. But anti-coronavirus closures limited EU-China trade in the first three months of 2020, business advising group Dezan Shira & Associates says.
Rajiv Biswas is Asia-Pacific chief economist with IHS Markit in Singapore. He said factories in Europe bought fewer parts from China and shipped fewer finished goods, such as cars, back to China.
The United States has a weaker trade partnership with China because of increased import tariffs. A sharp decrease in consumer buying during shutdowns across the United States further reduced trade.
Biswas added, “the trade war, and lockdowns this year have affected China-U.S. trade. And also, with the EU, since March, April and most of May, most of Europe was heavily affected and in lockdown.”
Becoming top trading partner
ASEAN member countries and China had also reduced each other’s costs with a no-tariff trade deal that took effect in 2010. ASEAN and China are expected to sign another deal, the Regional Comprehensive Economic Partnership, to improve trade further later this year.
Rising wages among Southeast Asia’s 640 million people permit growing numbers of Chinese goods, such as smartphones, to do well in the market. Industrialization of ASEAN member countries has created factories that buy materials from China to make finished goods. The products are then often sold in China.
Chinese imports from Vietnam rose 24 percent in the first three months of 2020 compared to the same time period of 2019. The value of goods from Indonesia rose 13 percent. The Dezan Shira group says that increase is because of “increasingly integrated supply chains.”
Chinese imports of parts for electronic devices rose about 26 percent early this year. Biswas said that factories in Malaysia and Thailand were still able to produce them when European suppliers had problems.
China still looked to Southeast Asia for palm oil, rubber and processed food, said Song Seng Wun. He is an economist with the bank CIMB in Singapore. He said, “Gradually, with economies stepping out from the lockdown and getting back on their feet, these things are starting to see economic activities picking up.”
I’m Jonathan Evans.
Ralph Jennings reported on this story for VOA News. Jonathan Evans adapted this story for Learning English. Hai Do was the editor.
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Words in This Story
integrated – adj. having different parts working together as a unit
potential – adj. capable of becoming real
supply chain – n. a system of organizations, people, activities, information, and resources involved in supplying a product or service to a consumer
tariff – n. a tax on goods coming into or leaving a country