PH is most at risk in ASEAN region from looming China-US trade war
The Philippines could be the most at risk in Southeast Asia from the worsening trade conflict between China and the US.
About 16.9 percent of the Philippines’ shipments abroad are part of China’s value chain; goods that serve as inputs to China’s exports, according to RHB Bank Bhd. That compares with 11.4 percent for Malaysia and just 2.2 percent for Vietnam.
US President Donald Trump on Thursday ordered his administration to consider imposing tariffs on an additional $100 billion in Chinese imports, dashing optimism that trade tensions could ease. Policy makers across Southeast Asia are focusing on bolstering domestic markets to cushion the fallout should the situation worsen.
The sectors that are likely to be hit badly are electronics, electrical machinery such as computers and industrial goods, RHB said in a note on Wednesday before the announcement of possible new US tariffs.
China is the biggest trading partner for many Southeast Asian economies and an important source of investment and tourism in the region. While large domestic markets in Indonesia and the Philippines help to shelter those economies from a trade war, others in the region, like Singapore, Malaysia and Thailand, are more reliant on exports.
Meanwhile, policy makers across Southeast Asia are bracing for a fallout from a US-China trade war, turning their focus on bolstering their domestic markets to cushion the blow.
China’s proposal Wednesday for an additional 25 percent tariff on about $50 billion of US imports ratcheted up the tension between the world’s two largest economies, rocking global markets and keeping officials on guard for ripple effects.
Indonesia Finance Minister Sri Mulyani Indrawati and Bank of Thailand Governor Veerathai Santiprabhob, who are attending a regional meeting of officials in Singapore, said on Thursday the conflict will have global repercussions, even if the direct impact on Southeast Asia’s gross domestic product may be minimal for now.
“The composition of our GDP is mostly fueled by consumption” and the government is aiming to boost investment to further diversify economic growth beyond exports, Indrawati said in an interview with Bloomberg Television’s Haslinda Amin. She added that the deteriorating trade relations between the US and China and prospects for further retaliation “is not going to serve the interests of both parties.”
US President Donald Trump is attempting to upend the global trade framework, arguing that China’s trade practices are unfair, with alleged violations including intellectual property theft and export subsidies. Indrawati, a former World Bank managing director, said those differences should be dealt with through the World Trade Organization rather than erecting tariff barriers. (Bloomberg)