ASEAN should be a unified entity to gain more from China's economy - CARI
Data from the Chinese General Administration of Customs showed that in the first two months of 2020, ASEAN surpassed the EU and became China's largest trading partner.
Supply chain diversification has put ASEAN in a sweet spot, but the real test is if the bloc is unified, opines the CIMB ASEAN Research Institute (CARI).
CARI said data from the Chinese General Administration of Customs showed that in the first two months of 2020, ASEAN surpassed the EU and became China’s largest trading partner.
Trade between ASEAN and China during the period increased 0.5 per cent year-on-year to US$85.3 billion amidst falling trade with most other trading nations as a result of the COVID-19 pandemic.
“ASEAN has hit a sweet spot during this pandemic,” noted Hong Kong-based research consultancy Asia-Analytica managing director Pauline Loong during CARI’s webinar briefings yesterday.
In a statement, CARI stated that the briefings titled ‘How can ASEAN Bounce Back: China’s Economic Trajectory and ASEAN the New Abnormal: Navigating the Post-Pandemic World’ are part of its COVID-19 Economic Recovery Plan Series.
Loong, who is also a senior fellow of CARI, said even before the onset of the US-China trade war, ASEAN member states had already benefited from structural shifts in international trade and commerce, “which have been hastened due to the pandemic.”
“The change in risk perceptions worldwide and the accelerating trend in supply chain diversification and regionalisation have put the spotlight on ASEAN as an investment destination.
“However, ASEAN’s longer-term challenge is in successfully dealing with the tectonic shifts underway in trade, finance and global alliances.
"Whether it can leverage its strength for more advantages in a multi-polar world ultimately rests on the group’s willingness to act as a truly unified entity,” she said.
She also projected that the chances of a meaningful recovery for the Chinese economy in the remaining months of 2020 are slim but 2021 could prove to be the turning point.
“The year 2021 is particularly important for the country’s leaders as it will be the centenary of the founding of the Chinese Communist Party.
"It is vital for the leadership to ensure economic recovery is on course and China will have the political determination and policy tools to achieve that goal.
“It is not often appreciated that as a command economy, China is equipped with more than the conventional market tools to boost growth,” she added.
Contrary to some predictions, Loong believes that despite talks of de-globalisation, world economies will remain highly interconnected.
“However, the speed of how the world begins to resume trade flows will depend on the reopening of other markets,” she said.
Meanwhile, CARI chairman and ASEAN Business Club, Malaysia president Tan Sri Dr Munir Majid echoed Loong’s insights, particularly on the need for ASEAN unity during the current economic uncertainty.
He noted that the performance of a better integrated regional economy in ASEAN and East Asia has become critical in the recovery process.
“It is important that we are able to distil post COVID-19 China without the noise and distraction which tends to judge the regime in that country and not the economic activities that are beginning to stir again.
“There are opportunities for investment relocation out of China of course, but there is also the huge Chinese market,” he said during the webinar.