The Asian trade industry suffers a crisis against the backdrop of China’s growth slowdown – research

Almaty. February 15. Silkroadnews - Against the backdrop of China’s growth slowdown the trade in Asia is going through the crisis - the growth in exports from the developing Asian economies slows down, the deliveries into China fell by 4% over the past year, research by the Institute of International Finance, published by the newspaper “Kommersant”, informs.
The correlation between the global economy growth and the volume of world trade is shooting down, the Asian countries with traditionally high share of exports in GDP (on average above 30%) are headed for the most significant rebalancing, the experts of the Washington-based Institute of International Finance (IIF) expect. South Korea, Malaysia and Thailand are the most dependent on the deliveries abroad (40 % of GDP), China’s exports are equivalent to a quarter of GDP, in India it makes 15%.
In recent years the trade in Asia got increasingly concentrated around China within the production chain frameworks. Previously it contributed to the growth in China’s imports of raw materials and components, but now the deliveries get reduced. The share of Asian countries’ exports to China fell by 10 percentage points over five years, to about 20% level (despite the fact that the share of imported components and raw materials in the exports from China makes around 30%). Import falls both due to the localization of suppliers in China and the increase in the share of the services sector (in 2015 it exceeded a little a half of China’s GDP for the first time making 50.5%). For the last year it was only Indonesia that managed to avoid the export squeeze. Also IIF points out it is only Vietnam that still retains the relative advantage of cheap labor. As for China, the economy’s rebalancing and yuan strengthening (by half for 15 years) costed the country 2% of GDP - also due to the net export reduction.
Another trade decline factor is a slow recovery of the US economy. The share of trade with the developed countries in Asia reduced for the past fifteen years (from 70% to 47%).
The global refusal of the trade restrictions between the countries of the region could stop the stagnation of trade - this shall increase the “horizontal integration”, i.e. trade in competing products, the report’s authors believe, noting, however, that the similarity of the range of exports to Asia often reaches 60% or even more. As for the competitive weakening of currencies in terms of structural adjustment, the IIF experts consider as useless.