No worries, say experts as Vietnam beats Malaysia in China trade

Economists don't see it as an indication of something wrong with the country's economy.

Shipping containers are seen at a port in Hai Phong city, Vietnam. China’s trade with Vietnam has reportedly hit US$11.2 billion. (Reuters pic)

PETALING JAYA: Two economists have sought to allay concerns over Malaysia’s loss of its position to Vietnam as China’s biggest trading partner in Asean.

Woo Wing Thye of the University of California-Davis and Mohd Nazari Ismail of Universiti Malaya said this didn’t mean that something had gone wrong with the Malaysian economy.

There is nothing for Malaysians to worry about, they told FMT.

According to recent reports, China’s trade with Vietnam hit US$11.2 billion in June while its trade with Malaysia was worth US$9.3 billion.

“The fact that Vietnam has displaced Malaysia as China’s number one Asean trading partner does not necessarily mean Malaysia has an internal obstacle to being competitive,” Wong said.

“For example, we export more durians to China than Vietnam does. It’s only when Vietnam overtakes Malaysia in durian exports that we can say Malaysia is less competitive than Vietnam.”

He said it shouldn’t surprise anyone that Vietnam would eventually increase its trade with China because of the size of its labour force and the proximity between the two countries.

What was unnatural, he added, was Malaysia’s position above Indonesia as China’s trade partner.

“Clearly, Indonesia has internal obstacles that are making Indonesian goods less competitive than Malaysian goods in international markets.”

Nazari said he believed Vietnam’s improved trade with its northern neighbour was due to an increase in its rice exports.

He added that improved relations between the two countries had helped. He was referring to the easing of tensions over the South China Sea dispute.

He dismissed the notion that Malaysia’s changing political landscape had affected trade with China, saying Beijing had no particular political preference when it came to trade.

He also said Malaysia would do well to spread its trade links beyond China.

“It’s important to note that China’s economy isn’t very solid at the moment because of huge internal debts, and its economy might slow down due to its trade war with the US,” he said.

It has been reported that trade between Malaysia and China is expected to exceed US$100 billion this year. It totalled US$96 billion last year. - FMT