China set for key role in Asia revival

With the region's growth engine back, nations seek to hitch a ride, experts say

As many of Asia's economies gradually put the worst of the pandemic disruptions behind them, China is expected to play a key role in leading a rebound in the region. And that's thanks to further steps seen in the country's opening-up and advances in its industrial innovations, experts said.

China's recovery "is probably the most positive factor for the world economy and also for Asia," said Rajiv Biswas, executive director and Asia-Pacific chief economist at consultancy IHS Markit. The world's second-largest economy "is a huge market for exports for most of the other Asian countries, and also for Australia and for New Zealand".

Biswas said China will lead the global and regional recovery, with the country's GDP expected to grow at around 7 percent in 2021.

Suthiphand Chirathiva, executive director of the ASEAN Studies Center at Chulalongkorn University in Bangkok, said: "China's recovery is in ASEAN's interest," referring to the Association of Southeast Asian Nations

Suthiphand, who is also executive director of Thai conglomerate Central Group, added: "With the more developed ASEAN nations, like Singapore, Malaysia and Thailand, the more they are linked to China's global value chain, the more impact they will feel from China's recovery."

The Thai executive expects business-to-business exchanges between China and ASEAN members will continue to grow after the pandemic eases.

Suan Teck Kin, executive director and head of research at Singapore's United Overseas Bank, agrees that China will be one of the few countries in the world producing a positive growth number for GDP this year.

He said China can be the locomotive that supports economic recovery in the region and beyond. Consumption and investment from domestic and foreign sources are stimulating growth, and innovation across a range of industries is being encouraged with targeted government measures. In the second quarter of this year, China's economy reversed a 6.8 percent first-quarter decline to posted year-on-year growth of 3.2 percent.

"China is an important factor," said Suan, adding that China's performance will be particularly important for the countries of the Southeast Asian regional grouping.

China has been ASEAN's largest trading partner for the past 10 years. The 10-nation bloc became China's largest trading partner for the first time in the first quarter of this year, surpassing the European Union and the United States, according to Xinhua.

'Worst already over'

Economic growth in Asian economies was hammered in the first half of this year because of the restrictions imposed to curb the spread of the coronavirus. Record declines in GDP were posted in Malaysia, the Philippines, South Korea and Japan.

But Suan is optimistic that the second quarter saw the worst of the pandemic-induced downturn. He believes conditions will improve.

Biswas also believes "the worst is already over", adding: "The pandemic has been a public health crisis, so it is very different from a financial crisis like (the global financial crisis) in 2009."

The sharp shocks to economies have been concentrated in the first half of 2020. As the world economy slowly recovers, the medium-to long-term impact on Asia-Pacific growth will be relatively moderate, Biswas said. Asia is still on track to represent half of global economic output by 2030.

Biswas sees signs of recovery economic data for June, pointing to rebounds in purchasing managers' indexes in many countries as coronavirus lockdowns eased.

He forecasts growth for the Asia-Pacific region of 0.6 percent and 0.7 percent, respectively, in the third and fourth quarters－up from a 2.8 percent contraction in the second quarter. He sees the region's economy shrinking 1.9 percent for the full year.