By Patturaja Murugaboopathy and Gaurav Dogra
Sept 25 (Reuters) - Asian countries are looking for catalysts beyond China to drive their economies as the Sino-U.S. trade war forces Chinese demand for their exports to shrink.
Luring foreign companies to their shores, finding ways to boost domestic consumption and scouring for alternate export markets are part of that policy mix as China's neighbours cope with flagging demand from the mainland, hitherto a large market for Asia in the regional supply chain.
Thailand has unveiled a "relocation package" comprising tax incentives and changes in laws to attract foreign firms .
Malaysia set up a panel to fast-track investments to woo businesses, and said it approved more than $500 million in proposals this month.
Indonesia's central bank cut its benchmark interest rates for the third time in three months last week, while also announcing measures to prop up domestic spending. India and the Philippines have cut rates multiple times.
Exports to China from Asia have slowed this year, prompting the sellers to look for substitute markets. Japan and South Korea saw their exports to China fall in the first half, but their shipments to the United States, United Kingdom and Russia rose during that period.
Malaysia and Thailand's exports to markets such as United States, Singapore and Vietnam grew.
"Efforts to look for unconventional markets have seen an increase in shipments to countries like Chile, Qatar, and Sri Lanka," Bank Indonesia deputy governor Dody Budi Waluyo told Reuters.
"We have diversified our export destinations so we can cover the disappearing shipments to China or to America."
A Reuters analysis of eight major economies including South Korea, Indonesia and Taiwan showed the contribution of export revenue from China to the total GDP fell to 8% at the end of 2019's first half, compared with 9.3% a year earlier.
Meanwhile, domestic demand added 0.7 percentage point to Japan's GDP growth of 1.8% in the second quarter, more than offsetting the 0.3 point negative contribution from external demand.
Malaysia's economy saw solid growth of 4.9% in the second quarter, on the back of strong private consumption.
"Economic growth is showing signs of slowing in emerging Asia, partly due to trade tensions. However, domestic private consumption is holding up well," OECD said in a July report.
SUPPLY CHAIN SHIFT
A recent trend of Asian companies shutting factories in China and shifting them home would help lower their dependence on China, economists said.