The Association of Southeast Asian Nations (ASEAN) met in Laos on Wednesday to address regional security and economic issues, with the worsening civil war in Myanmar as a key topic on the agenda.

Thailand has offered to host an “informal consultation” in December to explore ways to resolve the conflict, which has displaced millions of people.

“We want to see a political solution,” Thai Foreign Ministry spokesman Nikorndej Balankura told reporters, adding, “Thailand is ready to coordinate with all other member states so that there is a joint ASEAN effort that can lead to peace in Myanmar.”

He noted that Thailand’s initiative would complement existing ASEAN peace efforts but might not immediately involve countries outside the region.

The proposal, raised at an ASEAN foreign ministers’ meeting on Tuesday, comes as the bloc faces increasing challenges in addressing the crisis in Myanmar.

In recent months, Thailand has indicated that Myanmar’s other influential neighbors, China and India, could also play a role in peace efforts.

Nikorndej added that it would be up to ASEAN chair Laos and other member states to decide whether to invite Myanmar’s ruling generals or their opponents to the informal talks.

The ongoing dispute over the South China Sea is also high on the agenda.

US Secretary of State Antony Blinken, Indian Prime Minister Narendra Modi, Japanese Prime Minister Shigeru Ishiba, Chinese Premier Li Qiang, and Russian Foreign Minister Sergei Lavrov are among those attending the summit.

Opening the summit on Wednesday, Lao Prime Minister Sonexay Siphandone acknowledged the challenges ASEAN faces, stating, “ASEAN has its own ways of overcoming them. Laos believes that ASEAN’s past achievements are due to our understanding of each other. We help and cooperate with each other in the ASEAN style and principles.”

Meanwhile, Chinese Premier Li Qiang is scheduled to visit Vietnam following the summit.

China looks forward to working with ASEAN and other regional countries “to build consensus, deepen mutual trust, strengthen cooperation, and give new impetus to peace, stability, development, and prosperity in the region and the world,” Chinese Foreign Ministry spokesman Mao Ning said during a regular press briefing on Tuesday, according to Xinhua News Agency.

China decided on Tuesday to impose temporary anti-dumping measures on cognac imports from the European Union. The countermeasures came shortly after the 27-nation bloc imposed tariffs on Chinese-made electric vehicles (EVs).

China’s Ministry of Commerce announced that an investigation had found that the dumping of brandy from the European Union threatened to cause “significant damage” to its industry.

The Chinese ministry said in a statement that it would make “objective and fair” decisions when the ongoing anti-dumping and anti-subsidy investigation into EU pork products is completed.

The ministry also said it was considering raising tariffs on imports of large motor vehicles, which would hit German manufacturers the hardest. German exports of vehicles with engines of 2.5 litres or more to China reached $1.2 billion last year.

The ministry announced that from 11 October, importers of cognac from the EU will have to pay a deposit of between 34.8% and 39.0% of the import value.

France was seen as a target of Beijing’s brandy investigation because of its support for tariffs on Chinese-made electric vehicles. Brandy shipments from France to China reached $1.7 billion last year, accounting for 99% of the country’s alcoholic beverage imports.

This announcement clearly shows that China is determined to tax us in response to European decisions on electric vehicles,’ French cognac producers’ group BNIC said in an emailed response to Reuters, adding that everything must be done to prevent the imposition of tariffs.

French President Emmanuel Macron told a conference in Berlin last week that China’s cognac probe was unfounded, while tariffs on electric vehicles were necessary to maintain a level playing field, describing Beijing’s investigation as ‘pure retaliation’.

The EU Commission did not immediately respond to a request for comment.

Stock falls

Hennessy and Remy Martin, owned by LVMH, were among the brands most affected by the measures, with importers having to pay deposits of 39.0% and 38.1% respectively.

The deposits will make it more expensive to import spirits from the EU. However, these deposits may be refunded if an agreement is reached before the final tariffs are imposed.

Shares in Pernod Ricard fell by 4.2%, Remy Cointreau by 8.7% and Hennessy owner LVMH by 4.9%.

Companies that cooperated with the Chinese investigation were subject to a 34.8% penalty, while Martell had the lowest penalty at 30.6%.

Pernod Ricard, Remy Cointreau and LVMH did not immediately respond to requests for comment.

Jefferies analysts said the measures could mean a 20 per cent price increase for Chinese consumers and a 20 per cent reduction in sales volumes.

Remy’s sales, which are most exposed to the Chinese market, could fall by 6 per cent, while Pernod Group’s sales could be hit by 1.6 per cent, they said.

Luxury goods stocks fell as much as 7 per cent on Tuesday, with one trader attributing this to fears that the sector, which is heavily dependent on China, could see the next round of trade measures.

The spirits measures follow the EU’s decision to impose tariffs on Chinese-made electric vehicles by the end of October.

Before the vote in late August, China had suspended its planned anti-dumping measures on EU brandy, ostensibly as a goodwill gesture, even though it had found that EU brandy was being sold in China at below-market prices.

At the time, the Ministry of Commerce said the investigation would end before 5 January 2025, but that it could be extended.

China’s Ministry of Commerce previously said it had found that European distillers were selling brandy at a dumping margin of between 30.6% and 39% in the consumer market of 1.4 billion people, causing damage to the domestic industry.

In the EU’s decision to impose tariffs on Chinese-made electric vehicles, the bloc set tariff rates ranging from 7.8% for Tesla to 35.3% for SAIC and other manufacturers deemed uncooperative in its investigation. These rates are in addition to the 10 per cent car import duty.

The European Commission said it was willing to pursue alternative negotiations even after the tariffs were imposed.

Chinese economists have cut their forecasts for the country’s gross domestic product in 2024 in the latest quarterly Nikkei and Nikkei Quick News survey, underlining the pressure on authorities struggling to revive growth.

The average forecast of 28 local experts on China’s economy points to annual GDP growth slowing to 4.8 per cent, down from 4.9 per cent in the previous survey in July. Some of the economists submitted or updated their responses after Chinese authorities last week cut interest rates, supported the property market and pumped billions of dollars into the stock market, sending shares soaring. For those who responded before the stimulus began, the Nikkei asked whether they wanted to change their forecasts.

Of the 25 economists who made full-year growth forecasts in the previous quarterly survey, 16 cut their outlooks, while nine held their expectations steady. The overall range of growth forecasts shifted downwards from 4.8 to 5.3 percent to 4.5 to 5.0 percent. The average forecast for the July-September quarter is 4.6 percent, a further deceleration from the 4.7 percent growth recorded in the April-June period and weaker than the 4.9 percent expansion in the third quarter of last year. The quarter-on-quarter growth forecast for the third quarter, which better reflects the momentum of the economy, is 1.1% in seasonally adjusted terms, slightly higher than the 0.7% growth recorded in the second quarter.

Analysts warned of significant headwinds. KGI Asia’s Ken Chen cut his annual growth forecast to 4.9% from 5.3%, taking into account recent weaker-than-expected data ranging from industrial production and investment to retail and property sales. The current economic growth trend is still down, mainly due to the bottoming out of the property cycle and downward pressure from external demand,’ he said, suggesting that stimulus may not be enough to achieve the government’s annual GDP target of ‘around 5%’.

Despite policy efforts to lower mortgage rates and reduce the cost of buying, the housing sector remains a major drag. When economists were asked to pick the top three risks from a list of nine, the “sluggish housing market” topped the list, cited by 17 out of 20. This was followed by ‘weak consumer confidence’ and ‘no or inadequate policy’.

Hui Shan, chief China economist at Goldman Sachs, cut his forecast from 4.9% to 4.7%, saying that previous policy measures to stimulate the property market “may not be as effective”.

Tetsuji Sano, chief Asia economist at Sumitomo Mitsui DS Asset Management, said: ‘Consumer demand is likely to fall across the board as the population continues to age and the pension system is underdeveloped.

Property accounts for about 70% of Chinese household assets. This means that the fall in house prices has a direct negative wealth effect, reducing consumer confidence and fuelling deflation concerns.

There are clear risks that deflationary pressures could become entrenched,’ said Alex Muscatelli, Chief Economics Officer at Fitch Ratings. He noted that the GDP deflator, which reflects general price changes in the economy, has fallen on an annualised basis for five consecutive quarters, while prices of basic goods and services have remained flat.

China is heavily reliant on manufacturing and exports, especially as it has struggled to improve sentiment since the COVID-19 outbreak, but momentum in this sector is also starting to wane. Industrial production growth slowed to 4.5% y/y in August from 5.1% y/y in July.

This comes at a time of heightened trade protectionism, with the US, the European Union and Canada imposing additional tariffs on Chinese electric vehicles. Similarly, Indonesia has reimposed tariffs on goods such as textile imports, particularly from China, which came into effect in August.

Arjen van Dijkhuizen, senior economist at ABN AMRO Bank, noted that trade divergence has helped mitigate the impact of tariffs to some extent and that exports remain the key driver of China’s growth. ‘However, China’s supply-side strategy is contributing to escalating trade frictions, with the US, EU and others protecting strategic sectors from China’s [oversupply],’ he said.

Ongoing external and internal uncertainties appear to be behind the stimulus measures, which involve numerous central government agencies, including the People’s Bank of China.

It is rare for the PBOC to announce both a [reserve requirement ratio] cut and an interest rate cut at the same time, signalling the urgency policymakers feel to provide support,’ said Jing Liu, chief economist for Greater China at HSBC.

Jian Chang, chief China economist at Barclays, agreed. Recent developments signal that the Chinese leadership is taking a more proactive approach to tackling its most pressing structural problems. However, both bank economists left their annual forecasts unchanged at 4.9 per cent and 4.8 per cent respectively.

Looking beyond this year, the economists expect a gradual slowdown to 4.5 per cent in 2025 and 4.2 per cent in 2026, reflecting a long-term structural slowdown.

“The crisis in the housing sector, the associated loss of housing wealth and the need for households to repair their balance sheets, as well as uncertain income and job prospects in an uncertain economic environment, are hampering domestic consumption,” said Sophie Altermatt, economist at Julius Baer.

Wei Yao, chief Asia and China economist at Societe Generale, said ‘the current state of the economy calls for more radical measures’ and stressed the need for ‘restructuring of real estate and local government debt rather than further interest rate cuts to end the deflationary spiral’.