China Compensation

Business, China, Company Strategy, Economics, Indonesia, Malaysia, Polyolefins, Singapore
By John Richardson on 10-May-2013

By John Richardson

A MAJOR Southeast Asian polyethylene (PE) producer has reduced its percentage of exports to China from 30-40% in 2012 to just 10% so far this year, a source with the producer told the blog on the sidelines of the Asia Petrochemical Industry Conference (APIC) in Taipei.

This is further confirmation of the huge long-term changes taking place in China’s economy as its government forges ahead with rebalancing.

“We have managed to compensate for the drop in business to China by raising our intra-ASEAN [Association of Southeast Asian Nations] exports,” said the source.

Demand growth in the ASEAN region remains strong. For example, PE consumption in Thailand is expected to expand by around 5% this year, in line with the growth in overall GDP. In Indonesia, demand is expected to increase by more than the anticipated 6% rise in the country’s GDP.

But the question on the minds of several delegates at the event was to what the extent the ASEAN economies would be impacted by the slowdown in China, particularly heavily trade-exposed Singapore.