New platform part of China’s long-term plan for Asia seafood trade

Published on
July 30, 2015

A new trading platform seeking to link China and Southeast Asia's seafood markets has gotten off to a slow start with the first transaction going through recently. A 25-ton batch of Vietnamese frozen Basa filets was sold with much ceremony recently by Fuzhou Anxin to Jian Tong International in Hong Kong.

The deal, done electronically at the China ASEAN [Association of Southeast Asian Nations] Marine Product Exchange, aims to be the price setter for the whole region by handling volumes of seafood cross-border between China and its Southeast Asian neighbors. This is part of China’s ambitions to encourage cross border e-commerce at the same time as it also speeds up the liberalization of the Renminbi or Yuan currency. Trading at the new center is settled in yuans rather than dollars – the traditional currency of trade between China and its neighbors.

Selling through the Fuzhou exchange will be as easy as buying online, explained Jiang Xiong, head of trading at the new exchange at its opening earlier this year. The goal, he said, was to help China and ASEAN to “share maritime resources.”

The plan to become the No. 1 gateway for seafood trade in the region is starting at a crawl with trading volumes, for now, very low. And yet such a slow start won’t be of much concern to the Chinese authorities who are playing a long game with the new trading center. For them, ASEAN is an expanding source of growth for Chinese seafood exporters who see development and dynamism in the region as a future alternative to the relative flatness of the European market.

China’s third biggest seafood market, ASEAN bought 52.6 million tons of Chinese seafood in 2014, up 7.7 percent year on year and up a whopping 14.1 percent in value terms to USD 2.71 billion (EUR 2.5 billion). The actual figure may be higher given fourth among China’s markets last year was Hong Kong, a transshipment hub which also supplies Southeast Asian markets. By contrast the fifth-ranked EU paid USD 2.36 billion (EUR 2.2 billion) – up 3.7 percent – for 55.37 million metric tons in 2014 – down one percent.

Ongoing tension over fishing rights in the South China Sea – particularly between China and the Philippines – hasn’t stopped the momentum of China-ASEAN seafood trade. Meanwhile, an ever-stronger yuan gives Chinese consumers ever-greater buying power when competing for ASEAN seafood. The official exchange rate of the yuan against the U.S. dollar, the euro and the yen strengthened by 0.2 percent, 6.9 percent and 2.2 percent respectively during the past six months.

New facilities to handle incoming live seafood shipments and lower import tariffs make seafood from Southeast Asia competitive in China which now looks set to strengthen its grip on seafood supplies out of Southeast Asia, in part through improved infrastructure.

Fuzhou isn’t the only facility being set up by China to facilitate ASEAN seafood trade. The South International Fisheries Trade Center under construction in Zhanjiang, Guangdong (home base of shrimp processing giant Guolian Aquatic) aims to be a platform for China-ASEAN trade in raw and frozen shrimp and other seafood. Like Fuzhou the market aims to ultimately become a key regional trading hub and price-setting point for the seafood trade.

Chinese exports have worried some ASEAN fishing nations, with low priced fish such as mackerel causing tension in Indonesia. But the financial firepower of China may trump any concerns: over USD 100 billion (EUR 914.4 million) in loans for infrastructure has been made available by Beijing to ASEAN nations who are unlikely to upset Chinese plans given the funds available to compliant partner states.

Across its economy, China has officially called for all its export-processing industries to focus more on exports to emerging economies to offset shrinking demand from developed ones. Not surprisingly, overall exports to Southeast Asia, India and Africa grew by 9.5 percent, 10.7 percent and 12.9 percent respectively in the first half of this year. China is worried about the impact of sagging trade on employment and on efforts to shift a glut of industrial capacity.

Even if the China ASEAN Marine Product Exchange in Fuzhou turns out to be a white elephant it will have served a valuable purpose for Chinese authorities in shifting exports to new markets while trialing the convertibility of the yuan and the potential of cross-border online commerce. But the long-term losers in this case may be western purchasers of seafood who will find that their buying power will weaken in China, which will have new markets – and new sources of seafood supplies – in ASEAN.

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