China rebalancing offers South-east Asia growth chance

Subject

Outlook for Chinese economic rebalancing and South-east Asia's economies.

Significance

South-east Asian states' trade with China shrank by 1.6% in May, according to China's trade statistics announced today. Beijing's desire to make China's economy more reliant on domestic demand than exports; services than manufacturing; and consumption instead of investment will affect South-east Asian states, which collectively are China's third-largest trade partner, in positive and negative ways.

Impacts

• Chinese investments in South-east Asian services, infrastructure and logistics will likely grow.
• Maritime frictions between South-east Asia and China are unlikely seriously to undermine trading activities.
• However, there is some suspicion towards Chinese investments in South-east Asia; investors may conduct outreach activities.