Thailand’s #1 Trading Partner, China, Reveals Shocking Decline in Import and Export

China’s global imports and exports in December has finally declined as a consequence of trade dispute with the U.S. The negative sentiment will have a huge effect to Thai stock market, considering China is Thailand’s number one trade partner.

China has reported a 17% growth in trade surplus with the U.S. to hit ฿323.32 billion in 2018, the highest since 2006 despite the ongoing trade dispute between both countries. Analysts believe that the high growth in both exports and imports in 2018 from China was due to the majority of the deals were made before the increment on tariff went into effect.

The effect from trade dispute has shown on China’s global exports in December, which fell 4.4%, compared to 2017 with lower demand from major markets. Meanwhile, imports also saw a shocking drop by 7.6%, indicated the biggest decline since 2016. China exports to the U.S. plunged 3.5% in December while its imports from the U.S. were down 35.8% as well.

The decline shows an early sign of an economy slowdown in China as investors had feared. China ranked number one as Thailand’s trading partner, totaled 2.38 trillion baht in value from exports and imports in 2018, which is 15% of the overall value. Top import products from China were mechanic parts(฿148bln.), chemical supplies(฿126bln.), steel(฿159bln.), auto parts(฿80bln.), and computer parts(฿99bln.) etc. As for export products, computer parts(฿63bln.), rubber goods(฿82bln.), jewelry(฿10bln.), polyethylene resin(฿91bln.), circuit(฿26bln.) were top demands from the Chinese.

 

The slowdown in the Chinese economy has negative consequences to Thai market in many ways. Shares such as BEAUTY, TKN, DDD, CPF, and AOT, tend to follow the decline whenever Chinese markets show volatility. Meanwhile, logistic stocks would face some difficulties from lower shipments. Rubber products such as STA, NER, and IRC, would see a decline from lower demand as well.

The number of Chinese tourists in 2018 during January to November still record an increase of 7.86% YoY, but the data has shown that Chinese tourists had decreased since the boat incident in July. The inbound decreased by 0.87% in July, 11.77% in August, 14.89% in September, 19.80% in October, and 14.63% in November. The decline will no doubt affect hotel stocks, aviation stocks, and healthcare stocks.