Laos, China two-way trade trends downward
Laos, China two-way trade trends downward
Two-way trade between Laos and China could drop further if stronger measures weren't put in place to boost imports and exports of the two nations, a senior official has commented.
In 2011 the value of two-way trade between Laos and China amounted to US$1.3 billion. By 2014 it had risen to US$3.6 billion but fell to US$2.78 billion in 2015.
The Ministry for Industry and Commerce's Foreign Trade Policy Department Director General Dr Laohoua Cheuching told Vientiane Times on Friday the decline was partially due to the impact of the global economic slowdown.
Declining demand around the world has driven down prices of products, particularly commodities like mining ores and rubber, key exports which generate important income for Laos.
“Our country's exports are mainly mining, wooden and agriculture products to China and we also import a lot of products from China such as machinery, electronic equipment and so on,” Dr Laohoua said.
Worse still, most Lao rubber farmers are struggling to survive with the declining price of rubber on the world market.
Laos mainly exports rubber to China but the rubber price is currently 3,000-4,000 kip per kilogram, down from 9,000 kip per kg in 2012 and 17,000 kip in 2008.
Timber products are also a major income earner with large quantities sold to the Chinese market.
Nevertheless, the government is tightening its measures to clamp down on illegal logging, banning the export of all types of unfinished wooden products including timber and logs.
The Prime Minister's Order No 15 issued on May 13 also prohibits the removal of timber from forests while enhancing its efforts to inspect timber businesses.
Dr Laohoua assumed future timber product exports to China could decrease following the government's decision to close the country's forests.
“We have to find new products to export to offset the loss. If not, the value of our exports to China will decline further,” Dr Laohoua said.
China is one of the main trading partners for Laos and the largest foreign investor in the country. The total value of Chinese investment in Laos has reached US$6.7 billion.
Chinese companies have pumped funding into over 760 projects mainly in mining, hydropower, agriculture, finance, shopping centres, and special economic zones.
China has agreed to back capable and credible enterprises in setting up economic and trade cooperation zones in Laos. The move is part of the two countries' shared intention to raise their economic cooperation to a new stage based on a win-win approach.
As the two countries celebrate the 55th anniversary of the establishment of their diplomatic relations this year, the governments of Laos and China have agreed to push for further progress in ongoing Chinese-invested mega projects in Laos.
