China targets Southeast Asia for exports
Xi’s emphasis on multilateral relations and regional participation is rapidly opposite Trump’s conservationist trade policies. China Beige Book CEO Leland Miller discussed China’s increasing dominance in an interview with Bloomberg, stating:
“I would not call it a status of strength, but given that many countries are getting away from their close ties with the United States. Therefore, we are seeing a situation where China is becoming an attractive option because it is not the United States right now.”
On China’s trade alliances, recent recession in export to the US and jumping into shipments in the rest of the world, Miller commented:
“This is not an alliance, but it is not all transpirations. It is either essentially shaking its exports under the throat of other countries of China. The United States, you can see it in our China beige book data, you can see it in other business data, direct shipments for America are going down from China, but China cannot take back especially in the south.
Miller commented on China’s dominance in the region and said:
“They cannot push backward back; they cannot compete with sugar low prices that are dumping their overvival in Southeast Asia. So it is not about tightening an economic block. If anything, it is opposite. But it means, in a world in which China is trying to find places to dump its exports, and it is still very weak, it is very weak, and it is very weak, it is still very weak, Successful. “
Business targets domestic consumption amidst uncertainties
Despite China’s efforts to redirect shipments to South East Asia and other parts of the world, economic indicators are sending mixed signals.
Chinese exports increased by 7.2% year-on-year in July, from 5.8% in June, while imports increased 4.1% (June: 1.1%). However, the recent private sector PMI figures revealed the potential red flag. In particular, August’s ratingdog manufacturing and services PMIS showed two trends. The rising input cost and acute competition put pressure on the profit margin. The firms reduced the staffing level in the private sector to reduce the cost.
Beijing’s efforts to promote domestic consumption from falling margins and rising unemployment can be reduced. Unemployment increased from 5% to 5.2% in June in July, with young unemployment to 17.8% (June: 14.5%).
Increasing unemployment can weigh at spirit and domestic expenses. Despite these headwinds, Beijing introduced the latest policy measures this week, which aims to promote consumption. Beijing launched a program to subsidize consumer loans to allegedly promote domestic credit and expenses.
The latest subsidy program follows many policy measures targeting consumers. Retail sales figures for July indicated a sharp decline in consumer spending, trying the latest round of excitement. Retail sales increased by 3.7% in July from year to year, slowing down by 4.8% in June, weakening the consumer’s demand.
Consumer can reduce the impact of competition on a pickup margin in demand for credit and domestic expenses. Improvement in margin may allow firms to increase staffing levels, potentially improving emotion.
Mainland Stock Market Stumble
Hong Kong and mainland China-list stocks came under sales pressure on Thursday, September 4. The CSI 300 and the Shanghai Composite Index fell 2.24% and 1.71% respectively, while the Hang Seng index fell 1.2% in the morning trading.
Anxiety about margin, weakening of external demand and increasing unemployment, weighed spirit. The report of China’s financial regulators considering cooling measures for the stock market was added to the negative mood. Policy manufacturers are considering the introduction of measures to allegedly lift low-bound restrictions and curb the speculative trade.
Despite today’s disadvantage, mainland equity markets hold the concrete YTD benefits. The CSI 300 and Shanghai Composite Index are up to 10.42% and 11.45% respectively. While the CSI 300 and Shanghai Composite met the 11.32% profit of NASDAQ Composite, Hang Seng Index continues to perform better with an increase of 24.8%.
Given the latest pullbacks, policy measures of business news and Beijing can be important for market pace.
The US-China trade tension can weaken external demand, and the absence of fresh stimulation can highlight the market rally.
