Asian currency war is hurting Chinese sales to its top markets
Efforts by Asian economies to improve economic competitiveness through exports is hurting Chinese exports – particularly Japan, China’s top export market.
Japan bought 605,000 tons of seafood from China in 2015, compared to 660,200 tons in 2014. The total represented a drop of 8.5 percent, but the decrease was worse in value terms – down 4.25 percent in 2015, compared to a 2.81 percent drop in 2014.
All of this is happening as Japan seeks to stimulate domestic spending – and lure free-spending Chinese tourists – with a weaker yen. Since South Korea competes with Japan in many key export categories, it too has sought to weaken its currency, the won, to help its exports.
This is bad news for China, which saw a 2.2 percent drop (to 491,200) in seafood sales to South Korea last year, having boosted its shipments by a massive 20.8 percent in 2014. A 7.5 percent fall in the money value of Chinese seafood exports to Korean in 2015 compares with a 20 percent year-on-year increase in 2014.
Currency movements play a significant role in Asian trade and could signal a revival of Chinese seafood exports this year. China reported stronger-than-expected trade figures for March and the yuan fell sharply by 0.46 percent to 6.48 to the U.S. dollar on 14 April. Meanwhile, exports were up 19 percent year-on-year while imports declined by 1.7 percent, giving China the kind of trade surplus (USD 30 billion, EUR 26.4 billion) that used to be customary but which it hasn’t achieved for some time.
Several Hong Kong investment banks have been predicting medium-term depreciation of the yuan on a trade-weighted basis. That could spell a boost for exports, but given current regional currency turbulence, nothing is certain.