The danger of China in Asia: its effects are felt in continental countries

The deterioration of the Chinese economy is also affecting the economies of other mainland countries with which the country has close trade ties.

deflation of the Chinese economy; Concerns have intensified in recent weeks as slackened consumer demand, a weakening currency, a shaky housing sector and unsustainable local government debt have fueled fears.

Official data released Thursday showed China’s manufacturing sector contracted for the fifth straight month in August. The decline in the manufacturing sector was seen as a sign that the slowdown in global demand has further negatively affected the Chinese economy.

‘When China sneezes, Asia catches a cold’

Analyst Vincent Tsui of the Gavekal research group in Beijing told the Financial Times that China’s impact on the Asian economy is explained by the proverb “When China sneezes, Asia catches cold.” “The effects of this will be felt across the region as the Chinese authorities resist calls to boost ailing growth with stimulus,” Tsui said.

Tsui warned that the commercial and financial centers of Hong Kong and Singapore will bear the brunt of China’s weakening. China’s demand accounts for 13 percent and 9 percent of Hong Kong and Singapore’s gross domestic product, respectively.

CHINESE IMPACT ON SOUTH KOREA

South Korea, Asia’s fourth-largest economy, fell sharply in July despite being considered the pioneer of the region’s supply chain technology that has helped drive global growth for decades.

The country’s exports fell in July at their fastest pace in more than three years, boosted by reduced shipments of computer chips to China. Purchasing managers’ indices on Friday also showed factory activity fell for the 14th straight month in August.

Park Chong-hoon, head of research at Standard Chartered in Seoul, said: “Korea is unlikely to see a recovery any time soon unless the Chinese economy recovers quickly,” he said, noting challenges stemming from the tensions. between the United States and China and the substitution of Chinese imports. .

OTHER COUNTRIES ARE ALSO AFFECTED

The slump in South Korea’s manufacturing industry reached the longest slump in almost half a century, while other major exporters in the East Asia region were also hit by slowing demand.

Data from Japan and Taiwan, where activities fell for the fifth straight month, also showed factory output contracting and foreign demand weakening.

While the Australian economy has proven resilient amid trade tensions with China, which has imposed tariffs on everything from coal to barley to lobster, many of which were lifted in 2023, it now looks vulnerable to financial problems of its largest trading partner.

The Australian dollar fell to 10-month lows against the US dollar as expectations for China’s growth faded. Australia’s largest companies have begun to raise potential concerns about their own prospects if China fails to stimulate growth.

AFFECTED EXPORT NUMBERS AND GROWTH

On the other hand, due to the problems of the Chinese economy, there was a significant decrease in exports from Vietnam, while the growth rates of Malaysia and Thailand decreased. Vietnam reported that its second-quarter exports fell 14 percent on-year, pointing to a slowdown in industrial production this year.

Malaysia’s growth rate was the slowest in almost two years, while the Thai economy grew much slower than expected in the second quarter, buoyed by domestic political instability and low levels of tourism from China.