We have seen US-China trade war cresting when U.S. imposed a new list of tariffs on Chinese goods in mid of July, which could slap on $200 billion worth of goods imported from China into U.S.
And for China to retaliate, besides matching the U.S tariffs dollar-for-dollar; China has been devaluing the Yuan (Renmimbi) in order to offset the impact of tariffs. The Yuan has weakened more than 5 percent against US Dollar from mid June to late July.
With U.S. and China continue to have threatening conversation about levying punitive tariffs – how is this chaos going to impact the Malaysia-China trade?
China focusing on other countries for export
With the introduction of new tariffs, it will be expensive for China to export into U.S. Therefore, China will be focusing to hype up its export with other countries, inclusive Malaysia. That means we will see more inbound activities from China companies in reaching out to local companies, with better offer in order to push their outputs.
Harder to cash out US Dollar in China
The Chinese government has a lot of authority over its people. If continues to be put under pressure by the U.S, the Chinese government might isolate U.S, subsequently make it hard for the citizens in anything relevant to the U.S.
It might relook into its rebate rebate program offered to Chinese businesses (read “Why Chinese Businesses prefer the USD Dollar”), imposes tighter regulations or higher tax on foreign trade in US Dollar. This will push Chinese businesses to start looking into other alternative currencies, or simply to keep them in Yuan.
Cheaper Yuan, more value for Ringgit
As the value of Yuan continue to descend against US Dollar, we are getting more value out of Malaysia Ringgit against Yuan. As a result, Malaysia businesses would save more when settling their trade payment in Yuan, rather than US Dollar.
If coupled with the possible restrictions mentioned above, we will then see increase in demand for trade in Yuan.
In response to the economical shift, EasyPay Transfers is able to facilitate Malaysian SMEs with settlements of their payment obligations to vendors in China, in either Yuan or US Dollars. Businesses get to enjoy the convenience of EasyPay Transfers B2B payment service coupled with the FX rates that are lower than the counter rates offered by banks in Malaysia.
