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China now rivals US and Europe as growth engine for Asian exports

Discussion in 'China & Far East' started by qwerrty, Jun 11, 2016.

  1. qwerrty

    qwerrty SENIOR MEMBER

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    China now rivals US and Europe as growth engine for Asian exports

    While Asia is far from being a ‘yuan bloc’, idiosyncratic shocks to the mainland currency cannot be ignored, according to a new report

    UPDATED : Friday, 10 June, 2016, 6:26pm

    China is now an equal or even bigger driver of export growth in neighboring economies than the US and EU combined, marking a significant shift in the economic pecking order since the 2008 global financial crisis.

    That’s according to research by Deutsche Bank AG economists who weighed up the influence of the US and China over the rest of Asia through the prism of export growth, as well as the currency and bond markets.

    In Taiwan and Indonesia, for example, the growth of China’s gross domestic product (GDP) dominates the US and European Union’s as a source of export demand. In other economies, the trading giants are equally important.

    “This is noticeably different from the pre-crisis years when China was much less important –- bordering on irrelevance – as an engine of growth in the region,” Deutsche analysts led by Asia-Pacific chief economist Michael Spencer wrote in a note.

    After a rocky start to the year, China has been aided in its growth prospects by a record surge in credit in the first quarter. Key indicators for May are expected to show that the economy is continuing to find its footing and growth is on track to hit the Communist Party’s goal of 6.5 per cent to 7 per cent for 2016.

    The International Monetary Fund in April upgraded its China growth forecasts by 0.2 percentage point for this year and next, following signs of “resilient domestic demand” and growth in services that offset weakness in manufacturing.

    Beyond the pace of GDP growth, China’s currency gyrations are also increasingly important across the region. While the dollar still drives volatility in most Asian currencies, the yuan is as least as important for fluctuations in the Malaysian ringgit and South Korean won and is growing in significance for other exchange rates, except the Philippines peso.

    “Asia is far from being a ‘yuan bloc’, but idiosyncratic shocks to the yuan cannot be ignored,” according to the Deutsche analysts.

    The People’s Bank of China (PBOC)surprised traders this week by setting the reference rate at weaker-than-expected levels, helping send the currency to its biggest declines in four months versus a trade-weighted basket that includes the yen and the euro.

    The rate’s fixing had become more predictable since early February after the PBOC pledged greater transparency and the yuan increasingly tracked moves in the dollar against major currencies. That was after a sudden weakening of the yuan in January fuelled fears of a devaluation and triggered global market turmoil. During the subsequent three months, the central bank adopted a more market-based system to set the rate and said the basket would play a bigger role.

    But the US still dominates in the bond markets, and moves in Treasury yields continue to steer Asian bond trading. And even if Asia central banks don’t match rate tightening by the US Federal Reserve, financial conditions in the region may tighten if US yields increase.

    “We find only weak evidence that fluctuations in Chinese yields have any impact on other countries’ bond markets,” the analysts said.

    Code:
    http://www.scmp.com/news/china/economy/article/1971769/china-now-rivals-us-and-europe-growth-engine-asian-exports#add-comment
     
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  2. UKBengali

    UKBengali ELITE MEMBER

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    Not a real surprise.

    By 2030, the Chinese economy will be the centre of the Asian economy from Japan in the East, BD and Pakistan in the South to Iran in the West.
     
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  3. qwerrty

    qwerrty SENIOR MEMBER

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    but, but... tpp will destroy china :lol:
     
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  4. ahojunk

    ahojunk RETIRED INTL MOD

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    Some Vietnamese members say, "TPP and TTIP will destroy China". :rofl:

    By the way, neither Hillary nor Trump is too keen on TTP.

    Gordon Chang says, "China will collapse in xxxx" but the xxxx is a constantly moving target.

    Only the western media will pay clowns like Gordon Chang who doesn't even have a single shred of credibility. It's a big joke that Gordon Chang is a so-called China expert.

    IMHO we don't have to wait till 2030. It's already starting to happen.

    In our daily Aussie news, we care more about what is happening to the Chinese economy as it impacts us greatly. We don't pay that much attention to the US or EU.
     
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  5. ChineseTiger1986

    ChineseTiger1986 ELITE MEMBER

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    TPP is the milking machine from the US.
     
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  6. AndrewJin

    AndrewJin ELITE MEMBER

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    It has already destroyed China in 2012 when the new supa powa was officially manufactured.
    Trump will handle it, no worries!

    Read your Australian once, so many Chinese economy news, too obsessive!
     
    Last edited: Jun 11, 2016
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  7. Jlaw

    Jlaw ELITE MEMBER

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    Duh, Bond is issuing of debt. US is number one in debt so it's not a surprise here.
     
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  8. AViet

    AViet FULL MEMBER

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    Not all Vietnamese are like that. Aside from media hoax, most people in business, i think, understan the importance of trade with China.

    TPP seems now in a distant irrelevance and much less talked about on TV. I myself support it, but am not sure if it can be ever realized.
     
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  9. TaiShang

    TaiShang ELITE MEMBER

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    I guess lots of variables for its final success. Especially with over-factionalized US politics that now looks like in turmoil. Economic conditions and political economy in the East Asia, on the other hand, much more dynamic and orderly, hence, region-initiated models-institutions enjoy certain advantages.

    I guess most E. Asian countries are able to see that.
     
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