China to dominate CLMV as Thailand set to lose out
China is expected to dominate the CLMV market, with Thailand estimated to lose as much as 187 billion baht by 2022 as Cambodia, Laos, Myanmar and Vietnam are inundated with Chinese goods.
According to Aat Pisanwanich, director of the Center for International Trade Studies at the University of the Thai Chamber of Commerce, a study of trade and investment impacts on Thailand and Asean from Chinese products in CLMV markets found that China has played an important role in trade and export volume in the last 15 years -- both before and after the Asean Economic Community (AEC) took effect in 2015.
Between 2004 and 2018, the proportion of intra-Asean trade dropped to 24.1% of the bloc's total trade from 24.8% in 2004.
For the period, Asean fetched US$194.53 billion worth of exports to China, up 4.1 times, but imports surged 7.5 times to $277 billion.
Also during the period, the Asean 6 (Thailand, Indonesia, Singapore, Malaysia, the Philippines and Brunei) shipped $136.31 billion to China, up 3.3 times, while imports rose 5.9 times to $181.63 billion.
Meanwhile, shipments from CLMV rose 22.3 times to $58.21 billion, with imports from China up 17.6 times at $95.37 billion.
The study found that the CLMV had higher exports to China, the EU and the US in 2018, as opposed to the US, Asean and the EU before the AEC.
In 2018, the CLMV also opted to import more from China instead of Asean before the AEC period.
"At the end of 2018, the study found that the proportion of China's shipments to the CLMV rose significantly to 4.09% of total exports, compared with only 1.65% in 2004 and 2009," Mr Aat said. "The outlook is worrisome, particularly once the Regional Comprehensive Economic Partnership (RCEP) comes into force."
According to Mr Aat, the trade deal means China is expected to play a gigantic role in Asean. The pact is also expected to bring about a flood of cheap goods from China, especially into the CLMV market.
"Over the next three years, Thailand's export value estimated to be affected by Chinese exports to the CLMV market is estimated at 187.79 billion baht, making up 23.83% of total exports to the CLMV," Mr Aat said. "Worse still, Thailand needs to keep a close watch on the impact of the trade spat between China and the US and the baht's value, which is expected to become stronger over the next five years."
According to Mr Aat, Thai goods at higher risk of losing market share to China include yarns, textiles, synthetic fibres, shrimp, lobster, wood, wooden tiles, steel and components, corn, leather goods, travel products, tea, coffee, lead sheet, dried fruits, chemical products, concrete, sugar, tapioca, batteries and fireworks.
China's direct investment in the CLMV is also expected to surge over the next three years after expanding by 124% in 2018, notably in Cambodia, Laos and Vietnam, he said.