China Imports Fall, Asia Exporters Struggle

Exports from East Asia - from Southeast Asia across to Japan - have fallen an average of around 5 percent in dollar terms. Poor performers include Indonesian coal, Malaysian palm oil, Singapore pharmaceuticals and Korean cars. Indian iron ore is down by 80%.

Some of the weakness reflects strength of the dollar, which means earnings booked in local currencies are worth less when reported in the U.S. currency.

Another cyclical slowdown from which demand will bounce back? Asian exporters face something structural - and there will be no return to strong growth.

China’s 2001 accession to the World Trade Organisation “led to a burst of supply-chain integration and trade creation in the global economy”.

As China’s manufacturing centres boomed, shipping goods to the West’s spendthrift shoppers, supply chains stretched out across the region as factories sucked in high-end components. This specialisation lifted Asia’s productivity growth, too.

The dispersion of supply chains looks to be ending and might even go into reverse as China starts to make more of those components.

The biggest falls in Asian exports this year have been in shipments to China and other emerging markets.

Today, there’s no prospect of another China-like opening to rescue struggling exporters. The pace of world trade liberalisation has stalled. Talks over a U.S.-led Trans-Pacific Partnership (TPP) seem to be going nowhere. And there is no sign of another WTO-sponsored Doha round to prise open new markets.

Stalled global trade talks and the shrinkage of manufacturing supply chains that stretch from China, the world’s workshop, are making policymakers from Bangkok to Seoul consider new models as exports may never again grow rapidly as in the 2000s.