Trade war and costs speeding shifts of production to ASEAN and USA

Manufacturers are expanding to other regions in Asia because of rising mainland labor costs in recent years. This move is speeding up with the Trade War. Hong Kong and mainland companies are planning to hire more staff in cheaper regions of Asia as trade tensions between Washington and Beijing prompt firms to shift parts of their production lines to India, Bangladesh, Vietnam, and Malaysia.

They are not completely moving out of mainland China but they want to set up additional production lines in the Southeast Asia countries.

In 2016, Deloitte and others had identified Malaysia, India, Thailand, Indonesia and Vietnam as the top new places for low-cost manufacturing. The MITI V was the acronym they gave to Malaysia, India, Thailand, Indonesia and Vietnam.

Wages in Vietnam are half the wages in China.

However, complex products that involve plastics, electronics, printing, packaging are things where China will remain dominant for the next ten years.

Since 2001, hourly manufacturing wages in China have risen by an average of 12% a year. The yuan exchange rate became 10% cheaper. The 25% tariffs is speeding up shifts from China by about a year.

China already has highly productive and skilled workers. China is increasing automation and capital equipment investments.

In 2015, China launched a Made in China 2025 strategic plan. They wanted to increase the Chinese-domestic content of core materials to 40% by 2020 and 70% by 2025. The plan focuses on high-tech fields including the pharmaceutical industry which are dominated by US, Japan and Europe.

Many Chinese companies were already working hard to move up the value chain. The Made in China 2025 plan subsidizes the modernization by about 10-20%.

World Consumers

The US has $13 trillion in consumer spending in 2018. This will increase to about $13.6 trillion in 2020.

China claims that 80% of GDP growth in 2018 is from increased domestic consumer spending. From 2010 to 2017, consumption was just 50 percent of China’s economic growth.

China’s consumer spending is about $5 trillion in 2018 and was forecast to be about $5.9 trillion in 2020.

China’s consumer market is set to expand by about 12% every year (in US dollar terms) to reach a value of $8.4 trillion by 2022. The $8.4 trillion was based upon an exchange rate where the yuan was 10% stronger.

China ran a $375 billion goods trade surplus with the United States in 2017.

Western Europe’s total retail market is expected to grow by 1.6% in 2018 to $3.9 trillion.

20 thoughts on “Trade war and costs speeding shifts of production to ASEAN and USA”

  1. There can’t actually be a deficit. The money has to return to the US somehow because it loses 2% of its value yearly due to inflation. The deficit that is published doesn’t include financial instruments like real estate, stocks, bonds.

    Reply
  2. China’s consumer market is set to expand by about 12% every year (in US dollar terms) to reach a value of $8.4 trillion by 2022. The $8.4 trillion was based upon an exchange rate where the yuan was 10% stronger.” What? NOW we look at the exchange rate instead of PPP, when it is actually more appropriate to look at PPP when talking about the domestic consumer market of a nation? Love the hypocrisy on this site when it comes to 1) fluffing for Next Big China and b) fluffing for Musk.

    Reply
  3. There can’t actually be a deficit. The money has to return to the US somehow because it loses 2{22800fc54956079738b58e74e4dcd846757aa319aad70fcf90c97a58f3119a12} of its value yearly due to inflation. The deficit that is published doesn’t include financial instruments like real estate stocks bonds.

    Reply
  4. China’s consumer market is set to expand by about 12{22800fc54956079738b58e74e4dcd846757aa319aad70fcf90c97a58f3119a12} every year (in US dollar terms) to reach a value of $8.4 trillion by 2022. The $8.4 trillion was based upon an exchange rate where the yuan was 10{22800fc54956079738b58e74e4dcd846757aa319aad70fcf90c97a58f3119a12} stronger.””What? NOW we look at the exchange rate instead of PPP”””” when it is actually more appropriate to look at PPP when talking about the domestic consumer market of a nation? Love the hypocrisy on this site when it comes to 1) fluffing for Next Big China and b) fluffing for Musk.”””””””

    Reply
  5. OMG. Your continual display of ignorance on basic economic facts never stops, does it? Loo up the definition of ‘petrodollar’. Pay particular attention to its more modern meaning. Sheesh.

    Reply
  6. OMG. Your continual display of ignorance on basic economic facts never stops does it?Loo up the definition of ‘petrodollar’. Pay particular attention to its more modern meaning. Sheesh.

    Reply
  7. You sound so smart using words, but what does it all mean? Did your word somehow invalidated what I said. If you think so why not explain how. I don’t might learning. It doesn’t hurt. If you can’t rebut a person’s argument then just insult the person. One of the finer points covered in the book of debating.

    Reply
  8. You sound so smart using words but what does it all mean? Did your word somehow invalidated what I said. If you think so why not explain how. I don’t might learning. It doesn’t hurt. If you can’t rebut a person’s argument then just insult the person. One of the finer points covered in the book of debating.

    Reply
  9. You sound so smart using words, but what does it all mean? Did your word somehow invalidated what I said. If you think so why not explain how. I don’t might learning. It doesn’t hurt. If you can’t rebut a person’s argument then just insult the person. One of the finer points covered in the book of debating.

    Reply
  10. You sound so smart using words but what does it all mean? Did your word somehow invalidated what I said. If you think so why not explain how. I don’t might learning. It doesn’t hurt. If you can’t rebut a person’s argument then just insult the person. One of the finer points covered in the book of debating.

    Reply
  11. You sound so smart using words, but what does it all mean? Did your word somehow invalidated what I said. If you think so why not explain how. I don’t might learning. It doesn’t hurt.

    If you can’t rebut a person’s argument then just insult the person. One of the finer points covered in the book of debating.

    Reply
  12. OMG. Your continual display of ignorance on basic economic facts never stops, does it? Loo up the definition of ‘petrodollar’. Pay particular attention to its more modern meaning. Sheesh.

    Reply
  13. OMG. Your continual display of ignorance on basic economic facts never stops does it?Loo up the definition of ‘petrodollar’. Pay particular attention to its more modern meaning. Sheesh.

    Reply
  14. There can’t actually be a deficit. The money has to return to the US somehow because it loses 2% of its value yearly due to inflation. The deficit that is published doesn’t include financial instruments like real estate, stocks, bonds.

    Reply
  15. There can’t actually be a deficit. The money has to return to the US somehow because it loses 2{22800fc54956079738b58e74e4dcd846757aa319aad70fcf90c97a58f3119a12} of its value yearly due to inflation. The deficit that is published doesn’t include financial instruments like real estate stocks bonds.

    Reply
  16. China’s consumer market is set to expand by about 12% every year (in US dollar terms) to reach a value of $8.4 trillion by 2022. The $8.4 trillion was based upon an exchange rate where the yuan was 10% stronger.” What? NOW we look at the exchange rate instead of PPP, when it is actually more appropriate to look at PPP when talking about the domestic consumer market of a nation? Love the hypocrisy on this site when it comes to 1) fluffing for Next Big China and b) fluffing for Musk.

    Reply
  17. China’s consumer market is set to expand by about 12{22800fc54956079738b58e74e4dcd846757aa319aad70fcf90c97a58f3119a12} every year (in US dollar terms) to reach a value of $8.4 trillion by 2022. The $8.4 trillion was based upon an exchange rate where the yuan was 10{22800fc54956079738b58e74e4dcd846757aa319aad70fcf90c97a58f3119a12} stronger.””What? NOW we look at the exchange rate instead of PPP”””” when it is actually more appropriate to look at PPP when talking about the domestic consumer market of a nation? Love the hypocrisy on this site when it comes to 1) fluffing for Next Big China and b) fluffing for Musk.”””””””

    Reply
  18. There can’t actually be a deficit. The money has to return to the US somehow because it loses 2% of its value yearly due to inflation. The deficit that is published doesn’t include financial instruments like real estate, stocks, bonds.

    Reply
  19. “China’s consumer market is set to expand by about 12% every year (in US dollar terms) to reach a value of $8.4 trillion by 2022. The $8.4 trillion was based upon an exchange rate where the yuan was 10% stronger.”

    What? NOW we look at the exchange rate instead of PPP, when it is actually more appropriate to look at PPP when talking about the domestic consumer market of a nation?

    Love the hypocrisy on this site when it comes to 1) fluffing for Next Big China and b) fluffing for Musk.

    Reply

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