Japan External Trade Organization (JETRO)
(1) Exports and imports both grew steadily until 1995 in East Asia. In 1996, the year before the currency crisis, however, year-on-year growth in exports and imports slowed sharply to 4.2% and 4.9%, respectively (Table 7). This was due not only to trade being structured in such a way that growth in production and exports leads to increase in imports of parts and equipment (Table 8) and to declining international competitiveness in labor-intensive industries due to rocketing labor costs, but also to factors peculiar to 1996, such as the slump in demand for electronics. Although China and the Philippines provided the main impetus for growth in exports in East Asia in 1997, no economy emerged to drive import growth, and it was impossible to make up for the slowdown in the rate of growth of the ASEAN4 caused by the currency crisis.
(2) An examination of monthly changes in exports and imports of the countries and regions of East Asia shows that the effects of the crisis began to materialize from the end of 1997 (Table 7). Although exports had increased in 1997 on a year basis, exports began to shrink below the level one year earlier in Singapore, Malaysia, Thailand and "Hong Kong, China" from the end of 1997 to the beginning of 1998. Imports in Thailand, South Korea and Indonesia, which had basically been in decline throughout 1997, fell further from the end of 1997 to the beginning of 1998. Moreover, Malaysia, Singapore, "Hong Kong, China" and the Philippines, which had posted year-on-year import growth in 1997 on a year basis, suffered a year-on-year contraction during the same period, and a downward trend has become established. It is likely that the slump in economic activity caused by the currency crisis will further reduce imports and also cause exports to contract, and the trade depression in East Asia may worsen further in 1998.
(3) An examination of the state of "competition" between the ASEAN4 and China in the main export markets of Japan and the U.S. (based on a sample of categories of goods whose export by China increased by at least 30% and export by the ASEAN4 decreased both in terms of volume and value for two consecutive years in 1995 and 1996) shows that while competition with Chinese products in the Japanese market is limited to just a few categories of products, such as fans from Thailand and lenses from Malaysia, competition with China is more evident in the U.S. market, where competition centers on labor-intensive products such as clothing (from Malaysia, Thailand, Indonesia and the Philippines) and footwear (from Thailand and Indonesia) (Table 9). The competitive relationship in the U.S. market is particularly striking in the case of clothing, and it appears that ASEAN4 exports to the U.S. are falling in the face of competition with Chinese products. However, textiles and clothing accounted for 9.2% of the total value of exports of ASEAN4 in 1996, and even if the ASEAN4's competitiveness in these industries had fallen by China's devaluation of the yuan in January 1994, the direct impact on exports as a whole have been limited.