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China tensions hurt state's exports to Southeast Asia

  • Article by: ADAM BELZ
  • Star Tribune
  • August 29, 2012 - 10:36 PM

Minnesota's exports to Southeast Asia have fallen in 2012 as territorial disputes roil the seas around China.

Nations like Singapore, the Philippines and Thailand have been some of Minnesota's fastest-growing export markets in recent years. Exports to Southeast Asia grew 80 percent in 2010 and 2011, but trade to the region has slowed in the first six months of the year, falling 15 percent compared to 2011.

U.S. exports to the region -- including Vietnam, Indonesia, and Malaysia -- are down 1.5 percent over the same period.

Chip Peters of the U.S. Commercial Service in Minneapolis said the drop in exports has more to do with flooding in Thailand last October. The floodwater took a chunk out of the disk-drive industry, hurting several Minnesota technology companies and disrupting supply chains. Hutchinson-based Hutchinson Technology Inc. had one of its plants inundated in the flood.

"Thailand, for example, their automotive and hard-drive industries got hammered when it had that flooding," Peters said.

But year-over-year exports to Malaysia, Singapore, Vietnam and the Philippines have fallen as well, as regional tensions rise over China's role in the South China Sea. In July, the Association of Southeast Asian Nations (ASEAN) could not come up with a unified statement on the dispute. This was the first time in a half-century that leaders in Southeast Asia couldn't issue a joint communique, underscoring deep divisions in the region.

Vietnam, the Philippines, Malaysia, and Brunei, as well as Singapore and Thailand, have claims on trade routes and potential oil riches in the South China Sea, and wanted ASEAN to criticize China's actions there. Aside from tiny Brunei, those nations are all major U.S. trade partners.

Cambodia, supported by Laos and Myanmar, does not want to criticize their neighbors to the north. These countries have small economies and buy comparatively few U.S. goods. The Council on Foreign Relations called the impasse "disastrous."

Meanwhile, Japan and China are arguing about a series of islands in the East China Sea, and neither country appears to be backing down.

Adam Belz • 612-673-4405

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