Firm Chinese domestic demand continues to fuel Malaysian trade

The positive momentum of Malaysia's trade may continue in the second half as China's domestic demand remains firm, said economists.

Stronger import growth in China will help Malaysia's export growth maintain an upward trajectory in the second half, said MIDF Research, a local consulting firm in a report on Friday.

China's imports from Malaysia in June increased by 10.2 percent year-on-year.

"The bilateral trade outlook between China and Malaysia remains positive for the second half and for 2018," IHS Markit's Asia Pacific's chief economist Rajiv Biswas told Xinhua.

Rajiv said strong upturn in global electronics demand is giving a boost to bilateral trade between China and Malaysia, which attributes a large portion of its exports to electrical and electronic products.

Rajiv highlighted the launch of the Samsung Galaxy S8 and the upcoming new Apple iPhone as the key drivers to spur stronger demand for electronics exports.

Structural factors, such as the adoption of automation and higher penetration of electronic components in automobiles, has also helped boost global demand for electronics and linked Malaysia with China's electronics manufacturing supply chain, he said.

"Overall strong growth in Chinese domestic demand is also bolstering Chinese imports of Malaysian industrial raw materials, notably petroleum products, chemicals and rubber products," He added.

On June 7, Malaysian Ministry of International Trade and Industry said Malaysian export to China in May increased by 51.5 percent to 10.73 billion ringgit ($2.50 billion), the highest year-on-year growth since February 2010.