24/05/2025

BIZ & FINANCE SATURDAY | MAY 24, 2025

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G7 skirts tariffs, vows to tackle imbalances

Australia, already capturing big chunks of online sales, but their broadening appeal to Australians comes as they wrestle with lingering cost-of-living pressures. Singapore-based online fast fashion retailer Shein, which sells clothes made in China, earlier this month held a pop-up store in Sydney and launched its first Australia focused brand Aralina. Alibaba had been a low-key cross border player until last year when it started investing aggressively to boost global sales, including in Australia. Its main competitor JD.COM also launched its Australian site in March. The push was initially designed to reach more Chinese buyers overseas, but Trump’s tariff chaos thrust those e commerce sites into the spotlight, with Taobao now offering an English version of the app. Taobao is already promoting sales in English for the annual “618” shopping festival on June 18, one of China’s largest. It offers free shipping to Australia for clothes worth more than 249 yuan (RM146). Consumers interviewed by Reuters say Taobao’s app is easy to use and has translation functions to help communicate with sellers. High shipping costs can sometimes be a hindrance, but in some cases it is still cheaper than buying locally. The site’s growing profile in English-speaking communities has elevated the “Taobao haul” trend on TikTok in markets like Australia. – Reuters with Temu S’pore consumer prices tick up, pressures easing SINGAPORE: Singapore’s key consumer price gauge came in above expectations in April, data showed yesterday, but it remained at a low level and authorities said the risks to inflation were tilted to the downside given the uncertain global economic environment. The annual core inflation rate, which excludes private road transport and accommodation costs, was 0.7% in April, above the median forecast of 0.5% in a Reuters poll of economists and also the March reading of 0.5%. Headline inflation was 0.9% in annual terms in April, steady with March’s reading and a notch higher than economists’forecast of a 0.8% rate. While the rise in the annual core inflation rate was the first since September last year, when it had ticked up to 2.8%, it was the fourth consecutive month where the reading was below 1%. “Given the lack of clarity on (US) tariffs, notwithstanding the ongoing trade negotiations, especially the eventual outcome of the 90-day (US) trade truce with China, the disinflation path is likely still bumpy,“ OCBC economist Selena Ling said. The Monetary Authority of Singapore loosened monetary policy for the second time this year at a review in April, reflecting concerns about its growth outlook amid economic uncertainty from US tariffs. It also reduced its forecasts for both core and headline inflation to 0.5% to 1.5%.

SYDNEY: As businesses globally fret about sky-high US tariffs reviving rampant inflation, in Australia, the redirection of cheap Chinese goods is expected to provide relief for consumers and policymakers worried about stubborn cost pressures. Alibaba’s Taobao and JD.COM are the latest Chinese e-commerce platforms to enter the Australian market, seeking to tap into the bargain-starved country’s appetite for online deals. The expected flood of cheap goods from China, on top of a recent slowdown in inflation, is among several reasons the central bank felt confident enough to cut interest rates this week. In an economy like Australia’s that manufactures very few finished products domestically, Taobao is finding new markets outside of its core Chinese-speaking consumer base. “I don’t shop a lot, but if I do buy something, I will buy it online. If I can get it cheaper through Taobao, 100% I’ll buy from them,“ said Jodi Clarke, a therapist in Melbourne, whose first purchase on the site included three look-alike Hermes Kelly bags for A$129 (RM355). China’s factories are rushing to reach more new markets overseas as the domestic economy slows, with US President Donald Trump’s sweeping tariffs making it much more difficult to access the US, the world’s largest consumer market. Frederic Neumann, chief Asian economist and co-head of global research at HSBC, said the expansion BANFF: Finance ministers and central bank governors from the Group of Seven (G7) democracies papered over their differences on Thursday, pledging to tackle “excessive imbalances” in the global economy and saying they could increase sanctions on Russia. There had been doubt before the meeting whether it would issue a final communique, in light of divisions over US tariffs and Washington’s reluctance to refer to Russia’s war on Ukraine as illegal. But after three days of talks, participants signed on to a lengthy document devoid of previous language on fighting climate change and which also softened references to the Ukraine war. “We found common ground on the most pressing global issues that we face,” Canadian Finance Minister Francois-Philippe Champagne told the closing press conference. “I think it sends a very clear signal to the world ... that the G7 is united in purpose and in action.” The officials, who met in the Canadian Rocky Mountains, called for a common understanding of how “non-market policies and practices” undermine international economic security. The document did not name China, but references by the US and other G7 economies to non-market policies and practices are often targeted at its state subsidies and export-driven economic model. The G7 statement omitted mention of US President Donald Trump’s tariffs that are disrupting global trade and supply chains and swelling economic uncertainty.

work together to ensure no countries that financed the Russian war would be eligible to benefit from the reconstruction of Ukraine. “That’s a very big statement,” said Champagne, calling it a fundamental pillar of the communique. It did not name China or other countries the West has accused of supplying critical components to Russia in defiance of sanctions. G7 says Russia’s assets will stay frozen until it ends the war and compensates Ukraine. European Commission executive vice-president Valdis Dombrovskis said the G7 ministers discussed a proposal to lower the G7-led price cap of US$60 a barrel on Russian oil exports, since Russian crude is now selling below that. But the plan was not mentioned in the communique, partly because US Treasury Secretary Scott Bessent was not convinced it was needed, a European official said. Brent crude currently trades around US$64 per barrel. A European official said the US is “not convinced” about lowering the Russian oil price cap. A US Treasury spokesman said only that Bessent’s G7 engagements “were both pleasant and

o Group targets non-market threats to economic security, mulls more sanctions against Russia over Ukraine

smuggling drugs and other illicit goods. The duty-free exemption for packages of value less than US$800 (RM3,412) has been exploited by Chinese e-commerce companies, such as Shein and Temu. The Chinese embassy in Ottawa said it could not immediately comment on the G7 statement. The G7 finance chiefs condemned what they called Russia’s “continued brutal war” against Ukraine and said if ceasfire efforts failed, they would explore all possible options, including “further ramping up sanctions.” The description of the Ukraine war was watered down from October’s G7 statement, before Trump’s re-election, calling it an “illegal, unjustifiable, and unprovoked war of aggression against Ukraine.”

of Chinese e-commerce platforms overseas will intensify disinflation pressures, especially for consumer goods. “What the world is facing is a growing inflation divergence between the US and other economies, with prices climbing in the former, and stabilising, if not outright declining, in the latter,“ said Neumann. While the flood of Chinese goods has raised alarms in manufacturing dependent countries in Southeast Asia, Australia’s overwhelming reliance on imports for many household items diminishes most such concerns. The Reserve Bank of Australia judges recent global trade developments to be disinflationary in net terms for Australia, one of the a deal to eliminate Trump’s tariffs of 25% on many goods, such as steel and aluminum. “We’re trying to enhance growth and stability,” he added. “And obviously tariffs are something in that context that you can’t avoid discussing.” The gathering sets the stage for a summit of G7 leaders from June 15 to 17 in the nearby mountain resort area of Kananaskis. Trump will attend the summit, the White House confirmed on Thursday. The G7 communique called for an analysis of market concentration and international supply chain resilience. “We agree on the importance of a level playing field and taking a broadly coordinated approach to address the harm caused by those who do not abide by the same rules and lack transparency,” the grouping said. It also recognised an increase in low-value international “de

Champagne downplayed the lack of communique language on tariffs, but said ministers “were not skating around” the issue and had discussed its impact. Canada seeks Influx of Chinese e-commerce players set to ease Australian inflation fears minimis” package shipments that can overwhelm customs and tax collection systems and be used for Trump has diminished US support for Ukraine and suggested that Kyiv was to blame for the conflict as he tries to coax Russia into peace talks. But the G7 ministers pledged to “The risks to inflation are tilted towards the downside given heightened uncertainties in the external environment,“ the MAS and Trade Ministry said in a statement on the data. – Reuters constructive, and we look forward to our future engagements with all of our G7 partners on issues of mutual interest.” – Reuters

from China are unlikely to displace much Australian production and could even benefit industries reliant on imported inputs, such as clothing retailers. Goldman Sachs has estimated the redirection of Chinese goods into Australia, particularly in toys, furniture and clothing, could subtract 20-50 basis points from headline inflation over the next year or two. Those forecasts were made before China and the US agreed to pause steep tariffs this month. Headline consumer price inflation held at 2.4% in the first quarter, comfortably within the RBA’s target band of 2% to 3% and having come down from the 7.8% peak in late 2022. Chinese e-commerce platforms are not completely new in

reasons it opened the door to more interest rate cuts on Tuesday. “Because Australia has a higher share of Chinese products in most parts of its import basket compared with other economies, the redirection of tariff-affected exports is likely to place additional downward pressure on Australian import prices, especially in the short term,“ the RBA said in its quarterly economic update this week. Australia bought a whopping A$110 billion of goods last year from China, easily its biggest trading partner. Chinese trade data for April showed exports to Australia jumped 9% from the previous month while shipments to the US tumbled almost 18%. The RBA also noted cheap goods

The anticipated influx of cheap Chinese goods, combined with a recent slowdown in inflation, is one of several key reasons Australia felt confident enough to cut interest rates this week. – PEXELS PIX