August 19, 2016

China’s stock slump poses limited risk to Myanmar: analysts

Yangon, 10 July — While China’s recent stock market crash wiped out more than US $3 trillion in “paper wealth” from the country, analysts say there will be limited impact on Myanmar, despite its reliance on the world’s No. 2 economy as an investment source and export destination.
“China’s stock market is being plunged into chaos, rather than collapsing,” economist U Saw Naing told The GNLM on Friday. “There will be no direct impact on Myanmar, as the country has no link with the stock market and related developments in China.”
The economist said recent outbreaks of fighting on export routes within Myanmar were a real situation which had triggered a slowdown in trade.
Dr Soe Tun, vice-chairman of Myanmar Rice Federation, however, said there were concerns for border trade, especially in rice and agricultural produce, stemming from China’s bursting stock market bubble.
“Bad debts are likely to be seen in border trade if Chinese companies go bankrupt,” the vice-chairman said.
Most rice exports to China are sold through a credit system, he added, saying some payments had yet to be made on roughly 300,000 tons of rice.
Dr Soe Tun said a gradual decline in export volume to China was likely.
U Saw Naing said some Chinese buyers could use the stock market crash as an excuse to avoid making payments.
According to another economic observer, China’s stock market and related developments are not yet seen as posing systematic risks, and wealth effects from equity price changes in China are likely to be limited.
However, Myanmar should diversify its export markets and improve its business environment to attract more FDI from a wider range of sources in a broader variety of sectors, the observer said.
During a press briefing on the World Economic Outlook (WEO) update Thursday in Washington, Mr Olivier Blanchard, IMF Economic Counsellor and Director of Research Department, said although China is experiencing difficulties, the IMF should not assume it will have an immediate impact on the global economy.— GNLM


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