For many the Chinese slowdown, clearly evident from the slump in quarterly growth to just 6.8% in the last quarter of the calendar year 2008, is just a statistical blip that cannot be avoided in a global slump. But Asian nations who are closely integrated to the Chinese economy through trade ties have watched with distress as Chinese merchandise imports shrunk at a faster pace in each of the last three months. Numbers show that the decline in Chinese imports has accelerated from 18% in November 2008 to 21.3% in December and further to 43.1% in January 2009.
Quarterly numbers help us gauge the extent of the decline and they show that overall growth of the Chinese imports, which initially picked up from 28.9% in the first quarter of 2008 to 32.7% in the second, slipped to 25.8% in the third quarter and finally shrunk by 8.9% in the last.
Chinese imports, which now hover at $1 trillion?making it the third largest importing nation?are significant for the Asian economies that account for the bulk of the Chinese imports. This has happened because Chinese exports to the developed countries have been largely fuelled by imports from Asian nations who exported vast quantities of raw material and intermediate products.
And Chinese imports from Asian nations have fallen more sharply than from the rest of the world with imports declining by around a quarter each in November and December (January figures are not available). Quarterly trends show that Chinese imports from Asia first decelerated from 28.1% in the second quarter of 2008 to 20.6% in the second and then shrunk by 14.3% in the last.
Though the importance of the Chinese markets in absorbing exports from the rest of Asia vary across Asian nations, they are sizable in most cases. For instance in 2007, China was India?s fourth largest export market with a 6.5% share of its total exports, while it was the second largest market for Japan with the share being more than double at 15.3%. In case of other Asian countries, China?s share in their total exports was 48% in Hong Kong, 22.1% in South Korea, 9.7% in Singapore and Thailand each, 8.8% in Malaysia, 8.5% in Indonesia, 8.1% in Vietnam and 3.4% in Pakistan.
Asian exporters were some of the biggest gainers from the emergence of China as a major exporting nation. Between 2000 and 2007 the share of Asian countries in the manufactured imports into China had gone up from 67.6% to 72.9%. In contrast, the share of Europe and North America decelerated, that of the latter much faster than the former. The largest imports of manufactured goods into China were from Japan (18.2%), Taiwan (14.1%), South Korea (13.6%), US (7.7%), Malaysia (3.3%) and Philippines (3.1%). Share of Chinese imports of manufactured goods from Bric countries were minimal, ranging from 0.5% from India, 0.4% from Russia and 0.3% from Brazil. The Chinese markets are of special importance to most Asian economies not only because of its large size, but also because of the trade surplus that many of them have with China, especially when in comes to manufactured products which are crucial for generating employment in these countries.
Now let us look at how the fall in Chinese imports have affected its largest three import markets, namely Japan, Korea and Taiwan, which together account for more than a third of its total imports from across the globe. Of these three countries, the worst hit has been Taiwan as China reduced its last quarter imports by around 33.5%. Though less badly hit, the devastation was equally large for South Korea with China reducing its imports by 19%. However, Japan has fared relatively better with the Chinese imports from the country going down by only 6.4%.
The damage from shrinking imports has been similarly milder for a diverse range of countries like Pakistan, Singapore and Thailand. The figures for the last quarter of 2008 show that Chinese imports from Pakistan declined by 6.1%, from Singapore by 9.8% and from Thailand by 6.9%. There were only two nations whose imports into China continue to fare well in the last quarter of 2008. One was Vietnam with the flows going up by 4.1% and the other was Macau whose imports into China rose by 18.8% during the period.
Then there is another list of Asian countries that have been hit a little harder by the Chinese imports. These countries, which suffered a bad hit with Chinese imports shrinking in the 10-30% range in the fourth quarter include Hong Kong (22.5%), Indonesia (13.8%) and Malaysia (17%).
However, the two Asian nations that have been worst hit by the shrinking Chinese imports were India and Philippines. Last quarter numbers for 2008 show that while Chinese imports from India declined by 41.4%, that from Philippines contracted by almost half during the same period.
?p.raghavan@expressindia.com