See More on Facebook

Analysis, Economics

Collateral Advantage: Opportunities for Asean nations in the trade war

Quinn Libson looks at how ASEAN countries could prosper despite the trade war between the US and China.


Written by

Updated: June 10, 2019

Optimism about a potential trade deal between the United States and China faded in late May when President Donald Trump accused Beijing of backtracking on agreements.

Trump followed up the accusation with a punitive tariff hike of more than double to 25% on Chinese goods worth $200 billion.

He also threatened to increase tariffs on the remaining $300 billion worth of goods China exports to the US annually.

Early in June, China responded by raising tariffs to 25% on many of the $60 billion worth US export products.

When the world’s two largest economies exchange blows on goods worth billions of dollars, it’s impossible for other markets to avoid collateral consequences.

Asean countries have not been spared the shocks of this trade dispute. But many are also hoping to leverage the dispute by replacing Chinese production sources in American supply chains.

Vietnam is one such country looking to cash in on the opportunities provided by the China-US slugfest.

According to Brad W. Setser, Senior Fellow with US-based think tank Council on Foreign Relations, Vietnam has emerged as one of this trade war’s big winners.

In the first five months of 2019, Vietnam clocked 28%  growth in terms of exports to the US. Setser attributes the increase entirely to the ongoing trade dispute.

The Vietnamese currency (dong) has, however, been under US Treasury scrutiny.

If Vietnam is found to be artificially devaluing the dong to heighten its market competitiveness and is labeled a “currency manipulator”, it could lead to tariffs on Vietnamese imports which would hit growth.

Cambodia is another country that appears to see opportunities in the challenges posed by the trade war. As with Vietnam, Cambodian exports to the US have grown exponentially.

According to the Census Bureau of the US Department of Commerce, Cambodia’s exports to the United States for the first three months of this year were up 24% compared to the same period in 2018.

There is some concern, though, that Cambodian exports to the US could take a hit if any preferential trade arrangements come under review.

For, US lawmakers are reportedly closely following the review process for the European Union’s Everything But Arms (EBA) trade deal with Cambodia.

The EU began a formal EBA withdrawal procedure mid-February citing “serious human rights violations and a backsliding of democracy” in the Kingdom.

Thailand is another country which experts have cited as a replacement source for goods the United States would otherwise import from China.

The Council on Foreign Relations highlights the potential for Thailand’s broadcasting equipment and office machine-parts industries to fill the gap if the United States is buying less from China.

While Thailand’s Commerce Ministry has said it is setting its sights on replacing Chinese goods in the US market, at the moment that seems a far cry. The country’s overall exports are, in fact, declining thanks in large part due to a contraction of exports to China.

In the first four months of 2019, Thai exports to China have fallen by 8.1% compared to 2018. The decrease has led to a Thai trade deficit of $1.45 billion.

Many of these goods — automotive parts, computers and electronics — are still wrapped up in the supply chains that have been interrupted by the hike in tariffs by the US and China.

Thailand  knows shifting these supply chains will be a costly and slow process. But once new supply chains are created they won’t be easily upended.

If Thailand, Vietnam and Cambodia can stay ahead of the twists and turns of the trade war and fill the gaps in the US market where Chinese exports have died up, the collateral advantage, as it were, of the trade war would last long after it’s over.

 



Enjoyed this story? Share it.


Quinn Libson
About the Author: Quinn Libson is an Associate Editor at Asia News Network

Eastern Briefings

All you need to know about Asia


Our Eastern Briefings Newsletter presents curated stories from 22 Asian newspapers from South, Southeast and Northeast Asia.

Sign up and stay updated with the latest news.



By providing us with your email address, you agree to our Privacy Policy and Terms of Service.

View Today's Newsletter Here

Analysis, Economics

Ho Chi Minh attracts nearly 4 billion USD in investment in 2019

Manufacturing and textiles among key sectors. HCM City attracted about US$3.63 billion of foreign direct investment (FDI) capital in the first seven months of this year, marking a year-on-year increase of 15.2 per cent, according to the municipal People’s Committee. Nearly $688.8 million came from 678 newly registered projects, up 26.9 per cent in value and 18.3 per cent in the number of projects from the same period last year. In the period, 2,668 foreign investors bought shares and acquired stakes of domestic enterprises with total registered capital of $2.6 billion, 28.3 per cent and 16.7 per cent higher respectively than in the same period last year. Meanwhile, HCM City granted business licences to 24,529 new domestic enterprises worth more than VND396 trillion ($17 billion), up 0.9 per cent and 25.7 per cent, respectively. Up to 71,874 existing enterprises were allowed to add a c


By Viet Nam News
August 20, 2019

Analysis, Economics

The rise of the militant Islamic State affiliate in Afghanistan

Is ISIS on the comeback and rising in Afghanistan. A suicide bombing at a wedding party in Kabul claimed by a local affiliate of the militant Islamic State (IS) group has renewed fears about the growing threat posed by its thousands of fighters, as well as their ability to plot global attacks from a stronghold in the forbidding mountains of northeastern Afghanistan. The attack came as the Afghan Taliban appear to be nearing a deal with the United States to end nearly 18 years of fighting. Now Washington hopes the Afghan Taliban can help rein in IS fighters, even as some worry that Taliban fighters, disenchanted by a peace deal, could join IS. The US envoy in talks with the Afghan Taliban, Zalmay Khalilzad, says the peace process must be accelerated to put Afghanistan in a “much stronger position to defe


By Dawn
August 20, 2019

Analysis, Economics

Taiwan raises 2019 GDP growth forecast

GDP growth raised on investment data. Taiwan has raised its forecast for gross domestic product (GDP) growth for 2019, reflecting increased investment in Taiwan by local suppliers looking to steer clear of the trade dispute between the United States and China. The Directorate General of Budget, Accounting and Statistics (DGBAS) said in a statement Friday that it has revised its estimate for GDP growth in 2019 to 2.46 percent, up 0.27 percentage points from its previous forecast in May. A big factor in the revision was increased investment at home by Taiwan-based companies operating in China that wanted to increase their production capacity in Taiwan to avoid punitive tariffs imposed by the United States on goods made in China, the DGBAS said. The trade dispute has also prompted a shakeup in the global electronics supply chain, leading to more production capacity in Taiwan, the DGBAS said.


By ANN Members
August 19, 2019

Analysis, Economics

Signs of global recession haunt S. Korean economy

Trade wars and economic disputes have harmed the economy. A shadow of global recession looms over key economies as major markets have been dealing with some of their worst days in recent weeks. This is sparking concerns that chances of recession may also be growing on home turf, in South Korea. Last week, the yields on US 10-year Treasurys fell below two-year yields for the first time since 2007 – a phenomenon known as an inverted yield curve. Investors and experts alike are regarding such trend with wariness — every recession in the last 60 years has been preceded by the yield curve inversions. “Every time the US 10-year Treasuries fell below two-year yields, an economic recession came within a time frame of 18 months, which is why we have to be concerned,” Kong Dong-rak, an analyst at Daishin Securities said. “Even if it does not result in a recession, it is definitely a strong si


By The Korea Herald
August 19, 2019

Analysis, Economics

Hong Kong adds another dimension to US-China trade war

Hong Kong’s has become another consideration for Xi and Trump in their ongoing trade dispute. The United States and China have been embroiled in a trade war for almost two years with reciprocal tariffs and fiery rhetoric coming from both sides. Both economies have suffered and the world’s two largest economies both face the looming threat of recession. China, in addition to a tenuous economic situation is also facing more woes in Hong Kong, a Chinese territory that is self-governed. Protesters have taken to the streets in the island-territory after a proposed extradition law was publicly opposed. The protests have evolved beyond the initial grievances to long-held anxieties over the economy, living space and, ultimately, rule by Beijing. As the pro-democracy protests gather steam and threaten to become more widespread and violent, the United States has involved itself and ad


By Cod Satrusayang
August 16, 2019

Analysis, Economics

Why did Karachi sink in the rain?

The city’s topography has been altered without any regard to the overall form of the megapolis. As per the Meteorological Department’s near accurate prediction, Karachi experienced torrential rain this month. 27 people died and many more were injured. The situation was compounded by Eidul Azha that was being celebrated at the same time. Scores of cattle markets were set up in different locations across the city in addition to the central outlet along the Super Highway. Poor animals and their hapless keepers had to face a tough ordeal. Prices fell down sharply as animals began to fall sick due to the downpour and the filth. The rain caused a complete breakdown of urban life. Poor design and management of roads, drainage, intersections, underground sewers and sidewalks caused unparalleled chaos and


By Dawn
August 16, 2019