Back in December last year, we already saw how Beijing opted for the Chinese yuan as its first line of defense in the trade war against the US. But since then, they’ve also been taking other measures in safeguarding its interests. One of the more common trade practices to circumvent tariffs has been to resort to origin washing. And that is precisely what China has been actively pursuing since the turn of the year.
The idea here is to redirect goods originally manufactured for the US market by pushing them to another port before being redirected again to finally arrive in the US. The most common workaround by China has been to export these goods to Southeast Asia as such.
It comes as no surprise then as Xi Jinping chose the likes of Vietnam and Malaysia as two key countries to visit during his international tour. But Thailand is also another popular destination for this so-called origin washing.
And from the data by the Chinese customs, it is quite clear that this is taking place. There has been a spike in exports to Southeast Asia since the turn of the year already.
As China looks to prepare itself for trade talks with the US, it has also been stealthily making other moves on the chess board. This is just something to take note of.
h/t @ Robin Brooks
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