China should focus trade with ASEAN neighbors

As a weak global economy hinders demand from China largest trading partners, one trade manager in Shanghai says China should refocus its trading priorities with its Asian neighbors to the south.

Processing industries in particular turned in very low growth figures. An agricultural products trading company in Shanghai says 2012 was a hard year indeed.

Freek Boelen, Trading Manager of Wilmar Trading PTE, said, "The labour cost recently went up in the last couple of years a lot in China. On average I would say 5% to 10 %, even I've heard higher numbers. Another problem is of course the raw materials or the energy sources you need to use is also getting more and more expensive every year. So I think these factors definitely have an influence on the margins."

Boelen says that besides China's increasing production costs, depressed international markets also pulled down the trade figures. China's Customs says the country's trade with members of the European Union - China's largest trade partner, dropped by nearly 4 percent.

Although China's trade with the United States - its second largest trade partner, saw a rise of 8%, that number was only half the growth rate of the previous year. Boelen says rather than the EU and US markets, China's exporters should look more to their neighbors.

Freek Boelen said, "I see a growth in Asia, like Indonesia growing a lot, Thailand, Philippines. All these countries actually are doing very very well. So I think for the Chinese exporters, these market will be key markets."

China Customs reports the main drive for the country's foreign trade last year came from provinces in south China including Guangdong and Jiangsu, which between them accounted for about eighty percent of the country's total exports.