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China s manufacturing overdrive is rippling through global markets stirring anxiety in Asia that a flood of cheap imports could squeeze local industries But for inflation-worn economies economists say the influx of low-cost Chinese goods comes with a silver-lining lower inflation SINGAPORE Vincent Xue runs an online grocery retail business offering fresh produce canned food packaged easy-to-cook ingredients to cost-conscious local consumers in Singapore Xue s Nasdaq-listed Webuy Global sources primarily from suppliers in China Since late last year one third of his suppliers saddled with excess inventory in China have offered steep discounts of up to Chinese domestic markets are too competitive several larger F B manufacturers were struggling to destock their inventories as weak consumer demand drags he disclosed in Mandarin translated by CNBC Xue has also gotten busier this year after sealing a partnership with Chinese e-commerce platform Pinduoduo that has been making inroads into the Southeast Asian country There will be about - containers loaded with Pinduoduo s orders coming in every week Xue disclosed and Webuy Global will sponsorship the last-mile delivery to customers At a time when steep tariffs are deterring Chinese exports to the U S while domestic consumption remains a worry overcapacity has led Chinese producer prices to stay in deflationary territory for more than two years Consumer inflation has remained near zero Still the country is doubling down on manufacturing and this production overdrive is rippling through global markets stirring anxiety in Asia that a flood of cheap imports could squeeze local industries experts revealed Every economic activity around the world is concerned about being swamped by Chinese exports a multitude of of them have started to put up fences to importing from China noted Eswar Prasad senior professor of deal procedures and economics at Cornell University But for inflation-worn economies economists say the influx of low-cost Chinese goods comes with a silver-lining lower costs for consumers That in turn could offer central banks certain relief as they juggle lowering living costs while reviving increase on the back of rising transaction tensions For markets with limited manufacturing bases such as Australia cheap Chinese imports could ease the cost-of-living problem and help bring down inflationary pressure explained Nick Marro principal economist at Economist Intelligence Unit Emerging expansion risks and subdued inflation may pave the way for more rate cuts across Asia according to Nomura which expects central banks in the region to further decouple from the Fed and deliver additional easing The assets bank predicts Reserve Bank of India to deliver additional rate cuts of basis points during rest of the year central banks in Philippines and Thailand to cut rates by basis points each while Australia and Indonesia could lower rates by basis points and South Korea by a quarter-percentage-point China shock In Singapore the rise in costs of living was among the hot-button issues during the city-state s electoral process campaigning in the lead up to the polls held last month Core inflation in the country could surprise at the lower end of the MAS forecast range economists at Nomura reported citing the impact of influx of cheap Chinese imports The city-state is not alone in witnessing the disinflationary impact as low-cost Chinese goods flood in Disinflationary forces are likely to permeate across Asia added Nomura economists anticipating Asian nations to feel the impact from China shock accelerating in the coming months Asian economies were already wary of China s excess ceiling with several countries imposing anti-dumping duties to safeguard local manufacturing production even before the roll-out of Trump s sweeping tariffs In the late s and early s the world financial system experienced the so-called China shock when a surge in cheap China-made imports helped keep inflation low while costing local manufacturing jobs A sequel of sorts appears to be under way as Beijing focuses on exports to offset the drag in domestic consumption Chinese exports to the ASEAN bloc rose year on year in the first four months this year as shipments to the U S shrank according to China s official customs information In April alone China s shipments to ASEAN surged as exports to U S plunged over year on year These goods often arrive at a discount Economists at Goldman Sachs estimate Chinese products imported by Japan in the past two years to have become about cheaper compared to products from other countries India Vietnam and Indonesia have imposed various protectionist measures to provide various relief for domestic producers from intense price competition particularly in sectors facing overcapacity and cheap imports While for a large number of countries an influx of Chinese goods is a trade-off between lower inflation and the adverse impact on local production countries such as Thailand could be facing a double-edged sword Thailand will likely be the hardest-hit by China shock even sliding into a deflation this year Nomura economists predict while India Indonesia and the Philippines will also see inflation falling below central banks targets