Charles Esther
Vincent Xue, a Singapore-based entrepreneur, operates an online grocery retail business that targets budget-conscious locals.
His Nasdaq-listed company, Webuy Global, sources much of its inventory from China.
Since late 2024, about one-third of his suppliers in China have been offloading excess stock at steep discounts, offering up to 70% off regular prices.
Xue explained in Mandarin, translated by CNBC, that oversupply in China’s competitive domestic market has forced many food and beverage manufacturers to slash prices in a bid to clear inventory.
Some of these firms are struggling due to weak consumer demand in China, leading them to seek foreign markets like Singapore.
Adding to the influx, Xue has partnered with Chinese e-commerce giant Pinduoduo.
He revealed that five to six containers of Pinduoduo orders now arrive in Singapore each week, with Webuy Global handling the last-mile delivery.
China’s Export Shift and Its Global Impact
As steep U.S. tariffs restrict Chinese exports to America, and local consumption stagnates, Chinese manufacturers are ramping up exports to nearby regions.
This surge has triggered a prolonged deflation in China’s producer prices and kept consumer inflation near zero.
Still, rather than scaling back, China is doubling down on manufacturing.
This overproduction is sending shockwaves through Asia, raising fears that cheap Chinese imports could undercut local industries.
“Every economy around the world is concerned about being swamped by Chinese exports,” said Eswar Prasad, a senior trade policy professor at Cornell University.
In response, many countries have started imposing new import restrictions to protect domestic industries.
A Silver Lining Amid Inflation Woes
Despite the risk to local producers, low-cost Chinese goods could ease inflation for consumers.
Economists believe that for economies struggling with high living costs, the affordability of Chinese imports offers relief.
Nick Marro, principal economist at the Economist Intelligence Unit, noted that in countries with limited manufacturing like Australia, these imports could help tackle inflation and support economic growth.
This trade dynamic also presents an opportunity for central banks.
With consumer prices stabilising due to cheaper imports, monetary authorities in Asia may have room to cut interest rates.
According to Nomura, emerging risks and weak inflation trends are likely to prompt further monetary easing across Asia.
Nomura forecasts include a 100 basis point cut from the Reserve Bank of India, 75 basis points each from Thailand and the Philippines, 50 basis points from Australia and Indonesia, and 25 basis points from South Korea.
Singapore’s Election and the Cost of Living
In Singapore, the cost of living was a central issue during recent elections.
Nomura economists believe that core inflation could land at the lower end of the Monetary Authority of Singapore’s forecast, thanks in part to the surge in cheap imports from China.
This makes Singapore one of many nations experiencing the disinflationary effect of China’s excess supply.
The Re-Emergence of the ‘China Shock’
Experts warn that Asia could be entering a new phase of the so-called “China shock,” a term coined during the late 1990s and early 2000s when cheap Chinese goods suppressed global inflation but hurt local jobs.
Now, with China’s domestic demand still sluggish, Beijing is leaning on exports to sustain its economy.
China’s exports to ASEAN countries rose 11.5% year-on-year in the first four months of 2025, while exports to the U.S. fell 2.5%.
In April alone, ASEAN shipments surged by 20.8%, as U.S.-bound exports dropped over 21%.
According to Goldman Sachs, Chinese goods imported by Japan over the past two years were around 15% cheaper than those from other nations.
Asia’s Mixed Reactions and Defensive Measures
Several Asian countries are already reacting defensively.
India, Vietnam, and Indonesia have implemented protectionist policies to shield their industries from this price war.
These actions are mainly targeted at sectors experiencing overcapacity and vulnerable to low-cost imports.
Yet, for many nations, this situation presents a dilemma.
The benefits of lower inflation come at the cost of weakening local production.
Thailand, in particular, could be facing the worst scenario.
Nomura predicts the country might even enter deflation this year due to the heavy inflow of discounted Chinese goods.
India, Indonesia, and the Philippines are also expected to see inflation fall below their central banks’ targets.
Conclusion
China’s export-driven approach to offset weak domestic demand is reshaping economic dynamics across Asia.
While consumers may enjoy lower prices, the long-term effects on local industries and employment remain a major concern.
The “China shock” appears to be making a strong comeback — one that governments and central banks must navigate carefully in balancing inflation control with economic resilience.
