Regional trade still facing threats from eurozone, China slow down

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KUCHING: After several years of ups and downs, the region’s trade is still facing threats from the intensified direct pressures in the eurozone coupled with repercussions passing through the rest of the region through China.

According to the Asia Pacific Trade and Investment Report (APTIR) by the Economic and Social Commission for Asia and the Pacific (Escap), the Chinese economic slowdown has opened the doors to the fear of a global crisis re-emergence.

Recent data showed that China was experiencing difficulties with maintaining its high export growth. In the first and second quarters of 2012 China’s growth rate was 7.6 per cent and 10.5 per cent, respectively.

The growth was weaker on the import side at about six per cent during those two quarters. Apart for the global trade collapse in 2008-2009, these growth rates were the lowest that China had faced in the past decade.

“The data provided by China’s General Administration of Customs indicates that Chinese exports with high import content are struggling more than those with high domestic value-added. Thus, China’s export slowdown means contractions in China’s imports of raw materials and intermediate inputs from the rest of the world,” stated the report.

The report highlighted that on these types of exports, import content was very high; in general, China provided only assembling services while foreign suppliers provided raw materials, parts or components under a contractual arrangement for subsequent re-exportation of the processed products.

Ordinary exports and processed exports with imported materials also experienced declining growth rates during the same period.

The import data from the report reflected the chain reactions on the export side.

China’s imports for processing and assembling had been declining since early 2011. Imports of equipment used for processing and assembling activities were fluctuating, and growth was mainly negative, it pointed out.