Look to ASEAN to dent trade blow, urges NPC deputy
As a way to cushion the fallout from the China-US trade row, China should reinforce cooperation with the 10-member Association of Southeast Asian Nations to keep and boost its status in the global supply chain, a Hong Kong deputy to the nation’s top legislature suggested at a forum on Tuesday.
ASEAN member states, such as Indonesia, Myanmar and Vietnam, are seen as potential locations where lower value-added manufacturing activities in the global value supply could be housed, said David Wong Yaukar, a local deputy to the National People’s Congress.
The ongoing trade stand-off between the world’s two largest economies has accelerated the industrial relocation process, he told the International Forum on the Change of American Trade Policies and the Possible Responses from China held in Hong Kong. And, one of the key outcomes of the tensions exacerbated by the US is relocating the industries, which have long supported China’s status in the global supply chain, to other places.
Wong noted that a former US government official had said earlier that the supply chain shift could put the brakes on the Chinese mainland’s industrial development and overall economic growth.
The forum, organized by Lingnan University, drew speakers and participants from the industry and academia to discuss potential responses from the Chinese side as US-China negotiations agreed upon under the three-month trade truce enter the next stage.
Jesus Seade — under-secretary for North American-designate of Mexico’s Ministry of Foreign Affairs — said every economy should not act like a single entity, but interlink with each other in modern times.
Yue Yi — former vice-chairman and chief executive of Bank of China Hong Kong — told the forum: “Imposing tariffs on other countries will not solve the trade deficit of the US.”
Wong agreed with the views expressed, and highlighted the future direction for China — controlling all-round key technologies.
“When it comes to key technologies, foreign partners are probably unreliable,” Wong said, because China’s achievements in technology face many difficulties — both from the US and a few countries that have been affected by the trade tensions.
Domestic demand, which has become the most significant engine for China’s growth, needs to be further strengthened, he said.
“Implementing all these suggestions calls for deepening of reform in China,” Wong said. In the process of further reform, the market tends to play a decisive role in resources allocation, and reforming the supply side is the main stream in boosting Chinese economic growth.
Other points in this process include reforms in marketing structure, the macro-economic control system, fiscal and taxation system, financial system, State-owned enterprises system and the legal system.
Yue said that, as part of China’s financial system, the yuan exchange rate looks to continue its bidirectional fluctuation pattern in going forward, and the trade conflict could provide a new opportunity for the Chinese currency’s internalization.