China’s export thrust is pushing tariffs up across Asia
South China Morning Post, the Hong Kong daily, reported that the Malaysian Retailers Association has publicly called on Kuala Lumpur to significantly raise duties on imported goods costing $115 or less from the 10% levy imposed in January. The retailer’s association estimates it is losing 30% of its business to e-commerce portals selling goods shipped in from China. “Because we have not tightened up any rules or regulations, Malaysia has become a dumping ground for excess capacity from China," Ameer Ali Mydin of the Malaysian Retailers Association told the newspaper.
Two trends that have dominated China’s economic development have come to the fore. Dating back to 1999, when I began following the Chinese economy as a foreign correspondent in Hong Kong for the Financial Times, experts have said that China needed to raise its personal consumption levels as a proportion of GDP and scale back its industrial model, which was too dependent on boosting growth through endlessly increasing capital expenditure and manufacturing and relying on export markets to soak up surplus production. Instead, China’s total household consumption remains at just under 40% of GDP, compared with 60-70% in most developed countries.
Some economists argue that these cross-country comparisons underestimate the consumption of services in China. But when the gap is of such magnitude, that number still highlights Beijing’s inability to steer China’s economy to a more sustainable path. The second more recent trend is the bursting of China’s property bubble.
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