Rethinking the Global Supply Chain: Asian Economies Need to Diversify Their Exports
Keynote Speech by Deputy Investment, Trade and Industry Minister Liew Chin Tong
Kuala Lumpur: In his keynote speech at the Common Action Forum 2024, Deputy Investment, Trade and Industry Minister Liew Chin Tong emphasized the need for Asian economies to diversify their exports and move beyond their dependence on the US market. With the US middle class shrinking after decades of outsourcing manufacturing jobs to Asia, Liew urged businesses from China not to "rebadge" their products in Malaysia just to dodge US tariffs.
The Threat of Tariffs
Liew cited an article by economist Stephen Roach, which stated that officials in Asian economies believed the tariffs threatened by incoming US President Donald Trump were a bluff. However, Liew advised against investing in Malaysia solely to avoid US tariffs, as this would not be a sustainable strategy. He noted that the US tariffs on solar panel imports from four Southeast Asian nations, announced just days ago, were a recent example of the consequences of relying on a single market.
Diversifying Exports
To break free from their dependence on the US market, Asian economies need to create jobs with adequate pay for a middle class to emerge. Liew emphasized that this requires the creation of a sufficient number of consumers in regions such as ASEAN, the Middle East, Africa, and South America. By expanding their market reach, Asian economies can reduce their reliance on a single market and avoid the risks associated with fluctuations in global trade.
The Shifting Global Landscape
The US middle class has been shrinking due to decades of outsourcing manufacturing jobs to Asia. As a result, their purchasing power has decreased, making it challenging for Asian economies to rely solely on the US market. Liew noted that Asian economies have become massively productive due to the rapid acquisition of technology, including artificial intelligence. However, this productivity needs to be matched by the creation of a robust domestic market to ensure sustainable growth.
Conclusion
In conclusion, Liew’s speech highlights the need for Asian economies to rethink their global supply chain strategy and diversify their exports. By creating jobs with adequate pay and expanding their market reach, Asian economies can reduce their dependence on a single market and ensure sustainable growth. As the global landscape continues to shift, it is crucial for policymakers and business leaders to adapt and respond to these changes to ensure the long-term prosperity of their economies.
Frequently Asked Questions
Q: What is the current state of the US middle class?
A: The US middle class is shrinking due to decades of outsourcing manufacturing jobs to Asia.
Q: Why are Asian economies still dependent on the US market?
A: Due to their historical reliance on the US as their main consumer market, Asian economies have not yet diversified their exports.
Q: What can Asian economies do to reduce their dependence on the US market?
A: Asian economies need to create jobs with adequate pay and expand their market reach to regions such as ASEAN, the Middle East, Africa, and South America.