CARI Captures Issue 687: ASEAN economies struggle with influx of cheap Chinese imports


Captures has widened its scope to include news related to all the members of the Regional Comprehensive Economic Partnership (RCEP) agreement which was signed towards the end of 2020. Besides the ASEAN Member States, this includes Australia, New Zealand, China, Japan, and South Korea. The other weekly newsletters under CARI, China-ASEAN Monitor and Mekong Monitor will also be consolidated into the Captures newsletter. We hope this new version of Captures will serve you better and look forward to providing a curation of stories relevant to ASEAN and its trading partners.



ASEAN, CHINA
ASEAN economies struggle with influx of cheap Chinese imports
(14 January 2025) China’s exports grew 7.1% year-on-year in 2024 to a record CNY 25.45 trillion (USD 3.47 trillion), driven by rising shipments to Southeast Asia, which accounted for 16% of total exports, according to Chinese customs data. Exports to ASEAN surged 18.9% year-on-year in December, with the bloc becoming China’s largest export market in 2023 at USD 523.7 billion. The influx of Chinese goods, including a CNY 1 trillion export value of electric vehicles, lithium batteries, and solar panels, has pressured Southeast Asian industries, causing factory closures and job losses, such as 50,000 layoffs in Indonesia’s textile sector and 2,000 Thai factory closures between mid-2023 and mid-2024. In response, ASEAN nations have enacted measures like anti-dumping tariffs and taxes on low-cost imports; for example, Vietnam extended duties on Chinese aluminium products, while Thailand proposed a 30.9% tariff on Chinese steel. Analysts highlight challenges to ASEAN coordination due to differing economic conditions, while noting potential benefits from deeper economic ties with China, including technology transfers and infrastructure development, contingent on careful management and policy alignment.

MALAYSIA, UK
Malaysia and UK leveraging membership of CPTPP to strengthen trade and investment ties  
(16 January 2025) Malaysia and the United Kingdom are leveraging their membership in the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) to strengthen trade and investment ties. Malaysian Prime Minister Datuk Seri Anwar Ibrahim highlighted the significance of the UK’s entry into the CPTPP and Malaysia’s ratification in October 2024, which eliminates tariffs on member countries’ products. Speaking at the launch of YTL Group’s GBP 4 billion Brabazon New Town development in Bristol, Anwar commended YTL, Malaysia’s largest investor in the UK, for its contributions. The Brabazon project will include 6,500 sustainable homes, three schools, a large urban park, and essential services within a 15-minute radius. YTL, which entered the UK market in 2002 with the acquisition of Wessex Water, plans to invest an additional GBP 4 billion in the UK over five years. Anwar emphasised the importance of international frameworks like the CPTPP in expanding Malaysia’s global trade footprint.

THAILAND
Thailand’s SEC evaluating approval of Bitcoin ETF’s for listing on local exchanges
(15 January 2025) Thailand’s Securities and Exchange Commission (SEC) is evaluating the approval of Bitcoin exchange-traded funds (ETFs) for listing on local exchanges, allowing individual and institutional investors direct access to the cryptocurrency. Currently, Thai investors can only access overseas Bitcoin ETFs through funds such as One Asset Management’s offering launched in June 2024. The SEC Secretary-General highlighted the need to adapt to global cryptocurrency adoption trends, proposing enhanced investor protections. Binance and other digital-asset firms have identified Thailand as a key growth market amid eased restrictions. Thaksin Shinawatra, associated with the ruling Pheu Thai Party, has advocated issuing stablecoins backed by government bonds and developing a Bitcoin transaction sandbox in Phuket for tourism-related services. The SEC is also considering allowing highly-rated local firms to issue stablecoins backed by corporate bonds to enhance access to debt markets. As of November 2024, Thailand had approximately 270,000 active crypto trading accounts, with Bitcoin reaching a record high of USD 108,315 in December, though activity remains below pandemic-era peaks.

THAILAND
Thaksin Shinawatra proposes regulatory reforms to restore confidence in stock market
(13 January 2025) Thaksin Shinawatra, the de facto leader of Thailand’s ruling party, proposed regulatory reforms and incentives to restore confidence in Thailand’s USD 490 billion stock market, which has seen USD 9.6 billion in foreign outflows over two years due to scandals, sluggish economic performance, and political uncertainties. He urged stricter enforcement of regulations by the SEC and Stock Exchange of Thailand to combat fraud and criticised slow responses to corporate scandals involving firms like Stark Corp. and More Return Pcl. Thaksin recommended introducing tax incentives for long-term equity investors, reviewing high-frequency trading, and creating stablecoins backed by government bonds. Proposals included opening a carbon credit trading venue, reducing electricity tariffs to THB 3.70 baht per unit, and offering 99-year leases for a sea reclamation project to protect Bangkok. Thaksin projected GDP growth rates of over 3% in 2025, 4% in 2026, and 5% in 2027, citing plans for infrastructure development to attract foreign investment. Additional initiatives include setting a flat 20-baht commuter fare for Bangkok’s electric trains by October and evaluating tax reforms to enhance competitiveness.

INDONESIA, MALAYSIA, SINGAPORE
Johor-Singapore Special Economic Zone to potentially outcompete Indonesian SEZs 
(14 January 2025) Malaysia and Singapore’s agreement to develop the Johor-Singapore Special Economic Zone (JS-SEZ) is raising concerns in Indonesia over its potential to outcompete Indonesian SEZs for high-value investments. While corporate tax rates in Malaysia currently range from 15% to 24%, the JS-SEZ is expected to offer special tax rates of 5% for 15 years for companies in advanced sectors like AI, aerospace manufacturing, and medical devices. Indonesia’s corporate tax rate stands at 20%, but its SEZs provide up to 20 years of tax holidays and other allowances. Analysts warn that Indonesia faces challenges, including high costs, complex bureaucracy, limited green energy, insufficient infrastructure, and a lack of skilled labour, which have hindered its SEZs’ competitiveness. Indonesia’s SEZs, which have generated USD 15.7 billion in investment since 2012, face logistical barriers and limited realisation in several zones. Comparatively, Malaysia’s streamlined processes and favourable tax policies are seen as more attractive. Indonesia’s special economic adviser noted that global tech giants, including Apple, Alphabet, and Microsoft, have prioritised investments in Malaysia and Vietnam, while Indonesia has struggled to attract similar interest. Suggestions to enhance Indonesia’s SEZs include simplifying permit processes, improving port capacity, increasing green energy supply, and expanding vocational training to enhance workforce skills.

THE PHILIPPINES
Philippines’ bond bourse approves framework for trading forward contracts
(13 January 2025) The Philippine Securities and Exchange Commission approved PDS Group’s framework for trading government bond forward contracts, marking a key step in capital market development. Operated by Philippine Dealing & Exchange Corp. (PDEx), the non-deliverable contracts will allow participants to hedge interest-rate risks, with settlement via a bilateral netting system rather than central clearing. Trading will begin next month in PHP 50-million (USD 853,000) lots, offering the first peso interest-rate hedge akin to bond futures. This initiative complements the recently launched peso interest rate swap facility by the Bankers Association of the Philippines and aims to address growing hedging needs in one of Asia’s fastest-growing economies. Bangko Sentral ng Pilipinas (BSP) had earlier expanded permissible derivatives to include forward contracts. The PDS President emphasised the comprehensive framework now in place to support the market’s development.

VIET NAM
Viet Nam orders banks to withhold taxes for global tech platforms
(17 January 2025) Viet Nam has directed banks to withhold taxes for Agoda, Airbnb, Booking.com, and PayPal, as outlined in a General Tax Department letter dated 31 December. The order applies to 100 domestic and foreign banks, requiring them to deduct and declare tax obligations when processing payments through these platforms. The targeted companies, incorporated in low-tax jurisdictions such as Singapore, the Netherlands, and Ireland, have operated in Viet Nam for over a decade, generating revenues of up to tens of millions of dollars without registering for tax purposes. This measure is part of Vietnam’s broader efforts to tax global digital service providers and e-commerce platforms, complementing its participation in the OECD’s global minimum tax initiative. Authorities are also considering expanding taxation to include low-cost imports purchased via platforms like Shein. The four companies did not respond to requests for comment.


RCEP Monitor


CHINA

China’s population decreases by 1.39 million in 2024, third consecutive year of decline 
(17 January 2025) China’s population decreased by 1.39 million in 2024, reaching 1.408 billion, marking the third consecutive year of decline, according to the National Statistics Bureau. Births rose slightly to 9.54 million, 520,000 more than in 2023, attributed to delayed childbearing during the COVID-19 pandemic and the Year of the Dragon’s perceived auspiciousness. Despite this increase, it remains the second-lowest birth figure since 1949. Demographer He Yafu predicts a further decline in 2025. Bloomberg Intelligence projects the population may shrink to 1.36 billion by 2035, though efforts to encourage higher birth rates could delay this. In October, authorities pledged support for families with multiple children, including measures for housing, healthcare, and employment. Meanwhile, an ageing population and reduced workforce pose risks to economic growth and strain the pension system. In response, China announced plans to gradually raise the retirement age, the first adjustment since 1978, despite public opposition. 

CHINA
Shanghai and Guangdong reduce 2025 economic growth targets in response to Trump
(15 January 2025) China’s key exporting regions, Shanghai and Guangdong, have reduced their 2025 economic growth targets to approximately 5%, reflecting external challenges, including potential trade policies under US President-elect Donald Trump. Shanghai, which reported a 2024 GDP exceeding CNY 5 trillion and total trade of CNY 4.27 trillion, highlighted pressures on its export-reliant economy, with foreign direct investment falling from USD 24.1 billion in 2023 to USD 17.5 billion in 2024. The city aims to stabilise foreign trade and boost emerging industries like artificial intelligence and biomedicine, with R&D spending accounting for 4.4% of GDP. Guangdong, China’s largest provincial economy with a 2024 GDP exceeding CNY 14 trillion, plans to expand exports of electronics, smart appliances, and electric vehicles while diversifying markets beyond Europe and the US. Despite a 9.8% increase in trade volume to over CNY 9 trillion, Guangdong’s GDP growth lagged at 3.4% in the first three quarters of 2024, impacted by the property market slump. Both regions prioritise local consumption, technological investment, and foreign investment to mitigate external risks.

CHINA
China’s central bank outlines shift in country’s economic growth model
(13 January 2025) China’s central bank governor outlined a shift in the country’s economic growth model, moving away from a focus on investment towards prioritising consumption. This change comes amid concerns over insufficient domestic demand, particularly in consumption, and deflationary pressures. The governor highlighted that macroeconomic policy should now support both consumption and investment, with a stronger emphasis on the former. Measures to increase residents’ income, enhance subsidies, and improve social security will be introduced to stimulate consumption. While China met its 2024 growth target of around 5%, the outlook remains uncertain, especially with the looming threat of higher US tariffs. At a recent policy meeting, officials pledged to prioritise consumption, though the measures introduced so far, such as consumer trade-in programmes and increased subsidies, suggest incremental changes rather than a complete overhaul of the investment-heavy policy. Household spending accounts for just 45% of GDP, far below the OECD average. In his speech at the Asian Financial Forum, the governor also sought to reassure investors, noting improvements in housing sales and reduced risks from local government debt. The People’s Bank of China continues to support the yuan, using various tools, including interest rates and capital controls, to stabilise the currency.

15 participating countries

20 chapters

2.2 billion

US$26.2 trillion

28%

ASEAN member states, Australia, China, Japan, South Korea, New Zealand trade in goods and services, investment, intellectual property, e-commerce, competition, SMEs, economic and technical cooperation, and government procurement combined population, 30% world’s population combined GDP, 30% global GDP global trade (based on 2019 figures)

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