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Asia’s winners and losers in US-China Economical war, Vietnam & Malaysia: Part 1
THAILAND
Thailand may also be in a position to capitalize on moving the Chinese supply chain, according to experts.
In December, Thailand’s Kasikorn Bank expected that the country’s “strong fundamentals and proximity to China” would see it reap the benefits of production relocation and international direct investment, particularly in electronic items, built-in circuits, and automobile parts.
THAI MANUFACTURING
“Almost 50 percent of Thai export products to the US include machinery equipment and electrical products,” said Sundi Aiyer, a private management consultant in Singapore.
“This amount may rise even more. The motor vehicle sector in Thailand could also see a boost as some auto manufacturers choose to move or increase their production and supply chain businesses here.”
Uncertainty due to the ongoing trade conflict and opaque political circumstance will negatively affect Thailand’s growth, this month’s AMRO regional economic outlook predicted, but the nation’s strong national infrastructure investment will soften the impact.
THAILAND MANUFACTURING
MYANMAR, INDONESIA
Myanmar is likely to bring China the agricultural and food items the People’s Republic offers previously sourced from the UNITED STATES OF AMERICA especially cattle, seafood, and solid wood according to Matteo Vidiri in Mekong Economics.
Reforms to domestic investment laws may possibly also entice some producers to relocate to the nation’s special financial zones established in 2017.
INDONESIA FACTORY
Indonesia may not benefit just as much as it is neighbors. Discrepancies running business regulations between the national and local amounts leave international buyers leery.
THE DOWNSIDE
The big downside will be for trade-dependent Tiger economies.
There are fewer signs of a silver lining for economies that rely intensely on trade and transshipment, such as for example Singapore and Hong Kong, or for extremely developed economies like South Korea and Japan.
Taiwan-owned electronic tools manufacturing companies in China will pretty much inevitably be affected.
“Taiwanese tech businesses have a higher proportion of China-based manufacturing stated Pictet Asset Management’s Nandra-Koehrer. “We have seen this ‘going production shift, and it could only accelerate.”
FOXconn vietnam factory
Taiwan’s Foxconn last month stated though it might be challenging to rival its factories in China, it is ready to expand production into Vietnam along with India.
The Tiger economies, touted because of their massive economic growth spurts through the entire latter half of the 20th century, will probably suffer the largest fallout from the trade war. All have observed recent economic slowdowns.
In addition to being among the most export-dependent economies in Asia, their high-wage workers make them unlikely destinations for companies seeking to relocate manufacturing away of mainland China.
LOSERS, LOSERS, EVERYWHERE
But, ultimately, everyone is a loser.
While some countries in Southeast Asia might benefit in the short and medium term, experts warn a global shift towards trade protectionism is bad news over time for the world.
Even with the advantages of shifting production for several countries, a continuing decline in exports worldwide risks precipitating a worldwide economic slowdown and even a recession.
IMF warning about the consequences of trade war
“A key question may be the extent to which we withhold the rules-based trading regime that people have become familiar with during the last 30 years, which includes been good for economies in Asia,” said Michael Taylor at Moody’s in Singapore.
US-China trade war set to create big winners out of Asian countries.
The IMF has estimated that imposing tariffs on all Chinese goods – which Trump has repeatedly threatened – would shave 1.6 % off China’s GDP and .09 % from US output.
“The world is becoming a lot more integrated today than it had been in the 1970s, and the damage could be very much greater,” he said.
Some aren’t convinced the impacts will end up being that far-reaching.
“It’s going to become more of a short-term strike,” said Woods in Credit Suisse. “There will certainly be an identifiable impact and short-term dislocation for even more developed economies, however, they will adjust because they always do.
