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Malaysia Tightens Certificate of Origin Requirement Amid U.S. Tariff Pressures

Despite Xi Jinping’s visit to Malaysia in April and his appeal for Malaysia’s help in working against U.S. tariffs, Malaysia recently announced that it will tighten control over certificates of origin for goods exported to the U.S. This will help to prevent China from using Malaysia as a country-of-origin in attempts to circumvent U.S. tariffs.

On May 6, Malaysia’s Ministry of Investment, Trade and Industry (MITI) announced that it will now serve as the sole authority for issuing Non-Preferential Certificates of Origin (NPCO) for goods exported to the U.S. Chambers of commerce, trade associations, and other previously designated entities will no longer be permitted to issue such certificates. MITI also stated that Malaysia will implement additional measures to strengthen customs compliance, including investigations and enforcement actions to curb illegal transshipment of goods through Malaysian customs to the U.S.

Amid growing U.S. tariff pressures, many Chinese companies have turned to Malaysia as a transshipment hub to circumvent trade barriers. Typically, these firms collaborate with local freight forwarders and trading companies, using NPCOs issued by Malaysian chambers of commerce to reclassify the products’ origin as Malaysian.

This new policy may make this workaround no longer a viable path for Chinese exporters seeking to avoid tariffs.

Source: Sina, May 6, 2025
https://finance.sina.com.cn/tech/roll/2025-05-06/doc-inevrkuv4538648.shtml

Briefings | | |   Economy/Resources Geo-Strategic Trend US-China Relations

Stanford Economist: The CCP Cannot Win the Trade War—Its Systemic Failures Sparked China’s Crisis

Professor Xu Chenggang, a senior research fellow and economist at Stanford University, recently argued that the Chinese Communist Party (CCP) is incapable of fighting the trade war with the United States, as the core of China’s economic crisis lies in the CCP’s own systemic failures.

Xu noted that while the CCP claims it can counter U.S. tariffs by boosting domestic consumption, the reality is that consumer demand in China remains extremely weak. This is because hundreds of millions of Chinese citizens still live in poverty – a problem rooted in the CCP’s authoritarian governance.

One of the primary causes of this poverty, Xu explained, is China’s land ownership system. In rural areas, land is officially “collectively owned,” which in practice means it is controlled by the government. Farmers have no property rights and therefore cannot profit from the appreciation of land values – the CCP reaps those gains instead. When rural residents migrate to cities for work, they are denied basic welfare benefits. Even after settling in urban areas, they are treated as second-class citizens, lacking access to healthcare, pensions, and social security.

Additionally, nearly all banks in China are state-owned, and the government tightly controls access to credit. Private enterprises face significant hurdles securing financing, while their profits are often drained by state banks.

As a result, Xu emphasized, the majority of the Chinese population is not middle class but impoverished. According to a nationwide sampling survey, approximately 540 million people in China live on less than $5 per day – the international poverty threshold. “How can these people be expected to drive consumption?” he asked.

Xu also remarked that many economists outside China fail to grasp the true nature of the Communist Party system. “The Party does not prioritize the well-being of the people,” he said. “Its primary focus is on its military-industrial complex (essential for maintaining control over the country and people).” He argued that the CCP hoards national resources, exacerbating poverty and inequality, and therefore, its own system is causing the crisis in China.

Source: Epoch Times, May 1, 2025
https://www.epochtimes.com/gb/25/5/1/n14496259.htm

Briefings | | |   Economy/Resources

RFI Chinese: China’s Exports to the U.S. Fell 17.6 Percent in April

Radio France Internationale (RFI) Chinese Edition recently reported that China’s exports to the United States dropped by 17.6 percent in April compared to March, according to newly released data from China’s General Administration of Customs. Exports to the U.S. totaled US$33 billion last month, down from US$40.1 billion in March, as trade tensions between Beijing and Washington persist.

Some economists noted that the full impact of U.S. tariffs may not yet be reflected in April’s figures, partly due to transshipments through third countries and trade contracts signed prior to the implementation of the tariffs. However, analysts widely expect trade performance to deteriorate further in the coming months.

On the import side, China’s purchases declined by just 0.2 percent in April—less than the six percent drop forecast by analysts. Given that imports are seen as a key indicator of domestic consumer demand, this smaller-than-expected decrease has drawn close attention.

To counter the economic headwinds stemming from sluggish consumption and ongoing trade friction with the U.S., China’s central bank has recently introduced measures to stimulate the economy. These include a cut to the reserve requirement ratio (RRR) to encourage bank lending and a reduction in mortgage rates aimed at easing pressure on the housing market.

Source: RFI Chinese, May 9, 2025
https://tinyurl.com/uy6c4xbe

Briefings | | |   Economy/Resources US-China Relations

Xinhua: AI Becomes Core Growth Driver in 2024 Financial Reports of Chinese Tech Giants

Chinese internet companies recently released their 2024 financial reports. Xinhua News, the official state news agency of the People’s Republic of China, reported that AI technology stood out as a key driver of growth.

  • Tencent has accelerated AI integration across its businesses, using a “self-developed + open-source” strategy to boost products like Tencent Yuanbao and Tencent Docs.
  • Baidu’s Smart Cloud drove core business growth, with Q4 2024 revenue up 26 percent year-over-year.
  • Alibaba Cloud’s external commercial revenue rose 11 percent in Q4 2024, and its AI product revenue has seen triple-digit growth for six consecutive quarters.
  • Meituan invested 21.1 billion yuan (US$ 2.9 billion) in 2024 under its “Retail + Technology” strategy. JD.com has invested nearly 140 billion yuan in R&D since 2017, focusing on AI to improve supply chain and warehousing efficiency.

According to Li Mingtao of the China International E-commerce Center, Chinese companies are expanding AI development and application across areas like search, media editing, health, customer service, and supply chain. AI is also driving upgrades in industrial internet, with applications in production planning, inventory, remote control, and personalized services becoming the norm.

Source: Xinhua, April 30, 2025
http://www3.xinhuanet.com/tech/20250430/ce3d2ae7b1934cd4a55065d00bc1c516/c.html

Briefings | | |   Economy/Resources Information/Technology

American Chamber of Commerce in China: One Fifth of U.S. Firms No Longer Consider China a “Priority Investment Destination”

On April 25, the American Chamber of Commerce in China released its “2025 White Paper on American Companies in China,” jointly authored by representatives from over 100 member companies.

The white paper notes that rising tensions between China and the United States have, for the fifth consecutive year, remained the top business challenge facing U.S. companies operating in China – surpassing compliance risks and competitive pressure from Chinese firms.

Under the influence of geopolitical risks, 49 percent of surveyed companies still include China among their top three global investment destinations. However, the share of companies that consider China their number one investment destination has dropped by 6 percentage points from the previous year.

Furthermore, 21 percent of companies no longer consider China a priority investment destination – double the pre-COVID level. The white paper describes this trend as “alarming.”

Source: Lianhe Zaobao, April 25, 2025
https://www.zaobao.com.sg/news/china/story20250425-6245113

Briefings | | |   Economy/Resources US-China Relations

CNA: Temu’s Direct Shipments from China Have Largely Disappeared

Primary Taiwanese news agency Central News Agency (CNA) recently reported that, starting May 2, the United States imposes a tariff of 120 percent of the declared value or US$100 per piece on small packages from China under US$800. Chinese e-commerce giants SHEIN and Temu originally benefited from the U.S. tariff exemption for small parcels. Now the prices on these two sites have increased by 40 percent to 100 percent.

Currently on the Temu website, the products shipped directly from China have basically disappeared. Temu initially listed tariff duties separately at checkout, showing that the cost of imports often exceeded the price of the goods themselves. Now Temu seems to have switched to only displaying products markers of “Local” and “No import charges.” SHEIN still displays goods shipped from China, however, the website does not list the tariffs separately.

Both SHEIN and Temu have slashed advertising in the United States. Earlier, one out of every five Google Ads was an ad from these two companies. Now the ads of these two companies have disappeared from Google Ads.

Source: CNA, May 2, 2025
https://www.cna.com.tw/news/acn/202505020304.aspx

Briefings | | |   Economy/Resources US-China Relations

Cambodia Cracks Down on False ‘Made in Cambodia’ Labels

Cambodia is taking measures to address the U.S. concern that Chinese goods were selling to the U.S. under the “made in Cambodia” label to void U.S. tariff, despite Xi Jinping’s recent visit to the country.

The Cambodia China Times reported that on May 1, Cambodia Prime Minister Hun Manet publicly stated that to ensure the legitimacy of goods exported to the United States, the Cambodian government will implement new measures to strictly enforce rules of origin. The aim is to prevent foreign goods from being disguised as “Made in Cambodia” and rerouted through the country for export.

According to a ministerial order issued on April 30 regarding the “Procedures for Certificate of Origin Application for Certain Goods Exported to the U.S.,” manufacturers and exporters must apply for and obtain a certificate of origin before exporting listed goods to the U.S., following standardized procedures. These procedures include initial on-site inspections, issuance of Origin Certification Letters, required documentation from exporters and manufacturers, data-sharing mechanisms among departments and agencies, and inspection protocols based on risk assessments or complaints. A total of 126 categories of goods are included on the list, covering nearly all major Cambodian exports to the U.S., including apparel and accessories, leather goods, electrical and electronic products, bicycles, furniture, and toys.

The new measures will take effect on May 12.

Meanwhile, on the same day, Deputy Prime Minister and Minister of Economy and Finance Aun Pornmoniroth and Minister Cham Nimul jointly issued another ministerial order stating that, upon request by U.S. authorities or in suspicious cases, the General Department of Customs and Excise and the Trade Support Services Directorate will conduct joint investigations.

In a separate article, the Cambodia China Times commented that garments, footwear, and travel goods are Cambodia’s most important export products, accounting for over 60 percent of the country’s total exports, whereas the majority of which are destined for the U.S. market. The government’s decision to strictly enforce rules on certificates of origin is expected to help attract more international buyers to source Cambodian-made garments.

Sources:
1. The Cambodia China Times, May 1, 2025
https://www.cc-times.com/posts/28184
2. The Cambodia China Times, May 4, 2025
https://cc-times.com/posts/28201

Briefings | | |   Economy/Resources Geo-Strategic Trend

CBN: China’s April Manufacturing PMI Reflects Tariff War Pressures

China Business Network (CBN) recently reported that China’s manufacturing sector showed signs of strain in April, as the Manufacturing Purchasing Managers’ Index (PMI), released by the National Bureau of Statistics, dropped to 49.0 percent – falling into contraction territory and signaling growing vulnerability to external shocks.

The April figure marked a 1.5 percentage point decline from March. Sub-index data revealed weakening in both supply and demand, a sharp drop in external demand, and persistently low price levels. On the production side, the production sub-index fell to 49.8 (down 2.8 points), while the new orders sub-index dropped to 49.2 (down 2.6 points). The new export orders sub-index declined sharply to 44.7 – a 4.3 point fall and the lowest level in nearly a year – highlighting the mounting effects of ongoing tariff disputes.

PMI readings across enterprise sizes all remained in contraction: large enterprises at 49.2, medium at 48.8, and small at 48.7, reflecting month-on-month declines of 2.0, 1.1, and 0.9 points, respectively.

China’s experts noted that effective domestic demand remains insufficient. To address this, they called for accelerating the issuance of local government special bonds and ultra-long-term special treasury bonds. They also urged the timely introduction of new policy-based financial tools and additional liquidity measures to boost domestic demand and stabilize foreign trade.

Source: CBN, May 1, 2025
https://www.yicai.com/news/102597081.html

Briefings | | |   Economy/Resources US-China Relations